Latam stocks go sideways, traders eye long-term

By Luciana Lopez and Michael O’Boyle

SAO PAULO/MEXICO CITY, (Reuters) – Latin American stocks traded sideways early Thursday as investors saw little good news to lure them back to riskier assets, looking instead for signs a global rough patch could be improving.

The MSCI Latin American index slipped 0.12 percent, trading well within its range of the previous session.

“Nobody wants to move,” said Gustavo Mendonca, chief economist of Oren Investimentos in Brazil. “There’s little in the way of movement, low liquidity today and no real news.”

Investors have taken a hard look at riskier assets this year, including Latin American equities, as a spate of discouraging data in developed countries has raised doubts about the health of global economic recovery.

Add in regional inflation fears and the possibility of a slowdown of blockbuster growth in China — a major Latin America trading partner — and investors are largely sitting on the sidelines until a clearer picture emerges, analysts said.

“Markets are waiting for new indicators, new information,” said Marianna Costa, an economist with Link Investimentos.

Until investors feel reassured major economies have picked up pace after recent stumbles they will be hard-pressed to add risk to portfolios, she said.

Brazil’s Bovespa stock index edged up 0.35 percent to 63,254.00 despite time in negative territory, as well. Technical signs were mixed, reflecting the lack of clear direction.

“We believe that we have some support at current levels around 62,000/63,000,” said Flavio Serrano, an economist at Espirito Santo investment bank. “We have some support here, but also we do not see the possibility of a strong upward trend in the short term.”

A central bank interest rate hike to 12.25 percent from 12 percent after the close of markets on Wednesday did little to move markets, analysts said, since the decision was so widely expected.

Heavyweight commodity companies pulled the Bovespa up, with mining company Vale rising 0.11 percent and energy company Petrobras gaining 1.42 percent. Fellow oil and gas company OGX added 0.65 percent.

Limiting gains, shares of food processing company Brasil Foods sank 4.05 percent after a member of Brazil’s antitrust body voted late in the previous day against a 2009 merger that formed the company. A decision on the merger is now slated for June 15.

Mexico’s IPC index rose 0.39 percent, struggling to break out of its range of the past month. Analysts think the index has slumped back into a downtrend after breaking a key support this week.

Mining company Grupo Mexico advanced 1.98 percent. The shares had slumped 10 percent this week on worries left-wing populist Ollanta Humala, who won Peru’s Sunday presidential elections, would tax mining companies’ windfall profits. Grupo Mexico owns mines in Peru.

Chile’s IPSA index dipped 0.16 percent after posting gains in the past two sessions.

Shares in Chilean retailer La Polar plunged more than 23 percent on Thursday after the company disclosed management problems that could force it to increase provisions by at least $425 million.