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Latin American Stock Markets

Latin American Stock Markets

Source: Bloomberg
Brazil’s Bovespa Index rallied after an appeals court upheld a corruption conviction for former President Luiz Inacio Lula da Silva.

Latin American Markets

• On January 24 an appeals court in Brazil unanimously upheld ex-President and current presidential front-runner Luiz Inacio Lula da Silva’s (Lula) corruption conviction. While the ex-leader can still take his appeal to a higher court, the decision could prohibit Lula from running as a candidate for October’s presidential election. The decision could have big repercussions for Brazil’s economy. Lula had promised, if elected, to roll back market-friendly reforms and, on the day of the judges’ ruling, Brazil’s Ibovespa equity index soared 3.7 percent to a record 83,680 and the real appreciated against all major currencies.

• On February 22 Banco do Brasil S.A., the second largest bank by assets in Brazil and Latin America, announced Fourth Quarter 2017 earnings which beat analysts’ estimates with a net profit 13.9 percent above the average analyst estimate and 19 percent higher from the previous year. The main drivers of the strong performance were cost efficiencies and a lower tax rate. The stock was up 3.1 percent in response to the news.

• On February 27 Becle, S.A.B. de C.V., the world’s largest producer of tequila and known for the Jose Cuervo tequila brand, announced earnings which beat analysts’ estimates. Revenue was 10.5 percent higher than expected and the bottom line was more than double the market expectations. The stock was up 5.6 percent in response to the results.

• On March 2 Argentina’s largest power-transmission operator Cia de Transprote de Energia Electrica en Alta Tension Transener SA (Transener) rallied on news state-owned China Southern Power Grid Co. was considering a bid for a stake of the Argentinian government’s holding in the company. Argentina is seeking to divest assets amid a push to attract foreign investment, boost the economy, and reduce the budget deficit which in 2017 was equal to 4.1 percent of gross domestic product. Transener’s shares jumped 10.2 percent on the day.

• On March 5 the former CEO Pedro Faria of BRF S.A., one of the biggest food processing companies in the world, was arrested by Brazilian Federal Police in a probe that the company had avoided food safety checks from 2012 to 2015 related to meat. BRF’s shares slumped 19.8 percent in response to the arrest amid concerns about the company’s leadership following the BRF’s worst loss ever last year. The loss in 2017 was partly due to fallout from a police investigation known as “Operation Weak Flesh” into alleged bribery of food-sanitation inspectors at BRF and other food processors across the country.

• On March 9 shares of Localiza Rent a Car SA, Brazil’s largest rental car service, rose 6.3 percent after the company posted strong results that exceeded analysts’ estimates for Fourth Quarter 2017. Brazilians are renting more cars and the year-on-year number of rental days grew an impressive 48 percent year-on-year due to a strategic decrease in prices.