By Carla Mozee
Latin American equities slid Monday, as stocks on Wall Street
tumbled on worries that the U.S. banking system remains in rough
shape, and as oil prices posted their steepest one-day drop in more
than a month.
In Mexico, the IPC index fell 2.9%, with shares of cement maker
Cemex (CX) down 7.4%.
"The market talk is that [Cemex's] earnings will be poor, with
some talking about a 65% drop in net income" in the first quarter,
said RBC Capital Markets in a note Monday. "Recall that in March
Cemex pulled back from its intention of raising $500 million
through a bond offering."
Cemex's report is due April 28.
The fall in Cemex, which acts as a bellwether equity in Mexico
according to RBC, may have been "one potential driver" for a sharp
drop in the Mexican peso. The currency fell 2.2% to 13.415 per U.S.
dollar.
The only two winners on the IPC on Monday were household
products maker Kimberly-Clark de Mexico (KCDMY) and electronics
retailer Grupo Elektra, up 6.8% and 1.3%, respectively. Kimberly
last week posted quarterly results that were in line with market
expectations.
Shares of Mexican market heavyweight and wireless services
provider America Movil (AMX) dropped 3.7% and retailer Walmex
(WMMVY) fell 1.2%.
Shares of Banco Compartamos fell 1.2% to 34.80 pesos ($2.60)
following Citigroup's downgrade of the lender to hold from buy,
citing fair valuation and a recent rally in the shares.
But the company is the "best option to tap into Mexico's large
unbanked population," said Citi, which still holds a positive,
longer-term view of Compartamos and raised its price target on the
company to 38 pesos from 35 pesos.
In Sao Paulo, shares of oil giant Petrobras (PBR) dropped 2.4%
as crude-oil prices on the New York Mercantile Exchange fell 8.8%
to $45.88 a barrel, hurt by a strength in the dollar and excess
crude inventories. It was the commodity's worst percentage decline
since March 2.
Oil also pulled back after Bank of America's (BAC)
better-than-expected earnings were overshadowed by the company's
warning that losses from bad loans are poised to worsen.
"A stronger U.S. dollar and renewed concerns regarding an
economic recovery once again drove oil prices down," said analysts
at Commerzbank.
On Wall Street, the S&P 500 Index (SPX) surrendered 4.3% and
the Dow Jones Industrial Average (DJI) fell 3.6%.
Brazil pressured
At the same time, Brazilian analysts continue to expect Latin
America's largest economy to shrink this year. The central bank's
weekly survey shows that they now expect gross domestic product in
2009 to fall 0.49%, compared with the previous estimate of
0.3%.
In addition to a dimmer view of the Brazilian economy, Companhia
Vale do Rio Doce (RIO) shares also fell under pressure after the
world's largest iron-ore provider said it is offering temporary
prices discounts of 20% on long-term contracts. The prices will be
adjusted when discussions about benchmark prices for this year are
completed.
Vale's shares lost 2.3%.
The Bovespa equity index ended 2.9% lower, with the session also
influenced by the expiration of options.
Argentina's Merval fell 4.9% as shares of steel tube maker
Tenaris (TS) dropped 7.2%. Chile's IPSA fell 1.5%.