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Latin American Stock Markets

Latin American Stock Markets

Source: Bloomberg
Argentina’s Merval Index plummeted as the peso plunged and the nation was forced to ask the IMF for a loan to restore investor confidence.

Latin American Markets

• On April 20 Hypera SA, the largest pharmaceutical company in Brazil by market capitalization, disclosed that searches and seizures were carried out in the residences of the company’s CE0 Claudio Bergamo, founder Joao Alves de Queiroz, as well as two other employees. The searches were part of a government probe which started in 2016 after one of Hypera’s directors authorized irregular payments. The stock fell 6.4 percent on the day.

• On April 20 Mexican low-cost airline Concesionaria Vuela Compañía de Aviación, S.A.B. de C.V. (commonly known as Volaris) reported as loss of 1.1 billion pesos ($59 million) buffeted by higher fuel prices and a domestic price war sparked by a surge in available seats. The loss was almost twice as big as expected. Volaris’ share price plunged 18.5 percent following the report.

• On May 20 Nicholas Maduro was re-elected President of Venezuela in a landslide victory despite the nation’s crushing economic crisis. The US condemned the elections calling them an insult to democracy. Yet many locals believe that it is not Maduro but the right-wing business owners who are purposefully hiding food and other prices. Venezuela’s hyperinflation has sparked massive investment in equities as local business and individuals attempt to protect their savings and the Venezuelan stock index rallied 27.9 percent in the week following the election.

• On May 23 Brazil’s government effectively abandoned the bid to privatize state-controlled Centrais Elétricas Brasileiras S.A. (Eletrobras), the biggest power utility company in Latin America, after a committee hearing on the privatization schedule was canceled. Brazil’s general election is scheduled for October 2018 and as such the Congress is unlikely to have enough time to vote on a new draft bill. Eletrobras fell 11.5 percent on the day.

• On June 1 Pedro Parente, the CEO of Petróleo Brasileiro S.A (Petrobras), resigned in response to the eleven day trucker strike against rising fuel prices which grounded flights, shuttered sugar mills, and caused shortages of products from food to gasoline. Parente was responsible for instilling fuel policy which matched local fuel prices with international rates and spurred discontent among truck drivers. Petrobras fell 14.9 percent on the day.

• On June 7 Argentina secured a $50 billion loan from the International Monetary Fund (IMF) to help restore investor confidence as the government aims to tackle double digit inflation and a widening budget deficit. The loan was the largest ever in IMF’s history. Argentina was forced into talks with the IMF after three central bank interest-rate hikes pushed borrowing costs above 40 percent but failed to halt the peso from plunging. The Argentinian stock market index rose 4.2 percent in response to the news.