Latin America
Figure 14
Brazil’s Ibovespa’s Performance
Brazil equity markets continued to suffer in the second and
third quarters of 2013 falling 13.14% in the last six months
and 18.61% for the year-to-date. The sustained declined is
due to the low commodity demand and overall economic
slowdown of its trading partner China, since much of Brazils’
growth output is derived from selling commodities to the far
east. Brazilian investors are also worried about the country’s
persistent inflation and continued interest rate hikes. The
market did enjoy positive news in the period as reports of
an uptick in economic activity in China helped markets to
recover from its low in June. The index rose 10% to a high of
54,256.20, reducing the extent of its negative returns.
State oil company Petrobras performed better than the overall
market gaining 1.6% to BRL20.43 over the last six months,
as the company reopened platforms after maintenance work.
In September, the company produced an average of 2.577
billion barrels of oil and natural gas compared with 2.472
million a year earlier, the first annual increase since June. The
closure of platforms for maintenance have led to declining oil
output in Brazil for more than a year as Petrobras produces
approximately 90% of the nation’s oil. Petrobras’ stock
benefited from positive sentiment among investors after a
group led by the oil company won a license to develop Brazil’s
biggest oil discovery under terms that exceeded estimates.
Brazil’s Vale SA, the largest iron-ore producer and third
largest mining company had a strong performance returning
7.2% for the six-month review period. The stock closed at
BRL35.75 at the end of October after reporting a profit rise
for the first time in more than two years in the third‑quarter,
beating analysts’ estimates as Chinese demand for
steel‑making material pushed prices higher. Vale’s net sales
reportedly rose 11% to USD12.7 billion after Vale sold its
iron‑ore at an average of USD105.98 a metric ton, compared
to USD93.90 last year. Iron-ore entered a bull market in
July as China replenished stockpiles that shrank in March
to its lowest level since 2009. At BRL35.75, Vale is trading
at its highest level in eight months as investors expect the
company to profit the most among global peers from rising
iron-ore demand.
Source: Bloomberg, First Citizens Research and Analytics
Figure 15
Petrobras and Vale Stock Performance
Source: Bloomberg, First Citizens Research and Analytics
Figure 16
Latin America Equity Markets Performance
Mexico’s IPC index and Chile’s ISPA Index also suffered
losses over the review period. The IPC index fell 8.96% over
the last six months, while the ISPA declined 14.05% for the
same period.
Source: Bloomberg, First Citizens Research and Analytics
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