Latin American stocks rise sharply on Chinese bank IPO

By Michael O’Boyle and Luciana Lopez

MEXICO CITY/SAO PAULO (BestGrowthStock) – Latin American stocks rose sharply on Tuesday after the Agricultural Bank of China closed the books on the world’s biggest initial stock offering ever, boosting optimism about China’s economy (Read more about the fastest growing economy.).

The MSCI Latin American stocks index (.MILA00000PUS: ) climbed 1.91 percent, on track for its biggest one-day percentage jump since June 10.

Agricultural Bank of China priced its Shanghai initial public offering at the top of an indicated range, sources said on Tuesday, which combined with its Hong Kong offering and its over-allotment option is set to raise $22.2 billion.

“This indicates that the optimism is there on the Chinese economy, one of the most important motors of global growth,” said Gonzalo Fernandez, a strategist at Santander in Mexico City.

China is Brazil’s top trading partner and a major consumer of Latin America’s commodities, such as Chilean copper and Brazilian iron ore and oil.

An upbeat assessment of Asian growth by the Reserve Bank of Australia also supported optimism China will keep growing, after factory surveys last week raised fears of a slowdown.

The Bovespa (.BVSP: ) led gains among major regional indexes, advancing 1.87 percent, lifted by a 2 percent gain in shares of Vale (VALE5.SA: ), the world’s largest producer of iron ore.

Shares of state-controlled energy company Petrobras (PETR4.SA: ), which hit a 15-month low last week, gained 1.85 percent.

Also supporting markets, Spain sold 6 billion euros ($8.05 billion) of 10-year bonds, easing concerns of financing pressures in one of the focal points of Europe’s debt troubles.

And a member of the European Central Bank’s Governing Council, who is also the head of the Bank of France, said French banks would pass stress tests that will be released later this month.

“There is optimism that the stress tests will be better than expected,” Fernandez said.

“We think the volatility will continue until we get real definition on the situation in Europe and on growth in the United States,” he added.

Last week, Latin American stocks fell by the most since May after data raised concerns that the U.S. economy was slowing again after recovering from last year’s crash.

Investors on Tuesday scooped up bargains among battered shares, analysts said. Latin American currencies also firmed, boosted by the renewed optimism on China’s economy (Read more about the fastest growing economy.).

Mexico’s IPC stock index (.MXX: ) rose 0.58 percent. Mexican stocks last week posted their biggest decline since January. Mexico sends most of its exports to the United States.

Shares of miner Grupo Mexico (GMEXICOB.MX: ) added 2.54 percent, and the country’s leading retailer Wal-Mart de Mexico (WALMEXV.MX: ) moved up 1.97 percent.

Chile’s blue chip IPSA index (.IPSA: ) added 0.73 percent. The index has retreated since reaching an all-time high in June.

Shares of the country’s biggest private bank, Banco Santander Chile (STG.SN: ), climbed 4 percent, as regional energy group Enersis (ENE.SN: ) put on 1.35 percent.

(Editing by Leslie Adler)

Latin American stocks rise sharply on Chinese bank IPO