Credit Lyonnais Securities (USA) Latin America report sees stronger fourth quarter for equity markets.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY--(BUSINESS WIRE)--October 30, 1996--Credit Lyonnais Securities (USA), a Western Hemisphere Western Hemisphere Part of Earth comprising North and South America and the surrounding waters. Longitudes 20° W and 160° E are often considered its boundaries. unit of the Paris-headquartered worldwide banking institution, anticipates stronger growth in the fourth quarter for Latin American equity markets, following only a 0.6% rise in the third quarter, according to the quarterly strategy report, "Latin Rhythms," released today. Credit Lyonnais Head of Research, Brian Corris, based in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , said the stronger showing is expected to be fueled by an economic recovery, which he noted has already been confirmed in Argentina, Mexico and Peru. "There are also early signs that the economies of Venezuela and Brazil have bottomed," Mr. Corris added. The report commented that the optimistic outlook for Latin American equities is in part based on a positive outlook for the Brady Bond market. "During the third quarter, Brady Bonds Brady Bonds Bonds that are issued by the governments of developing countries. Brady Bonds are some of the most liquid emerging market securities. They are named after former U.S. significantly outperformed stocks, bringing the year-to-date performance of the JP Morgan Brady Bond index to 25.4% versus the MSCI EMF emf: see electromotive force. (1) (ElectroMagnetic Field) See electromagnetic radiation. (2) (Enhanced MetaFile) See Windows metafile. Latin America rise of 16.2%. We believe that stocks will catch up to Bradies over the next couple of quarters as the gap between the economic recovery and earnings momentum is closed." Mr. Corris also said that Latin American markets have been affected by low levels of interest on the part of institutions in emerging markets generally. "Even though U.S. mutual fund inflows have risen back to healthy levels, emerging markets have been unable to attract a sizable portion of the funds. Trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. has pretty much dried up and local investors account for a greater percentage of trading. Many of our dedicated emerging markets clients have only seen a trickle of new funds into their portfolios in the third quarter." The report suggested overweighing asset allocations in Mexico ("economic recovery better than expected and market is cheap"), Peru ("privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned will help market during the quarter"), and Venezuela ("market still cheap in spite of rally at 8- 10x estimated 1997 P/E P/E See: Price/earnings ratio "). It labeled Brazil neutral, and suggested underweighing assets in Argentina ("market fully valued Fully Valued A stock whose price analysts believe reflects the market's recognition of the company's underlying fundamental earnings power and therefore is unlikely to rise further in price. If the stock goes up from that price, it is called overvalued. following sharp rebound in September"), Chile ("investors will continue to avoid worst performing market in Latin America in 1996"), and Colombia ("market cheap and discounts much of the negatives, (but) U.S. sanctions are possible and (President) Samper unlikely to resign"). Among the report's top stock picks in Mexico are Apasco, Enersis and Madeco. In Peru, it favors Southern Peru Copper, Telefonica del Peru and Cem. Norte Pacasmayo; and in Venezuela, Sivensa and EDC EDC See: Export Development Corp. . The report noted that in the third quarter Latin America benefited from a shift in weightings out of Asian markets by many major emerging market mutual funds. Thus, it cautioned that "given Latin America's outperformance, fund managers may be tempted to shift back into Asia at some point." The study reported that based on consensus estimates, Latin American markets trade at 11x 1997 earnings while Asian markets trade at 9x 1997 earnings. Credit Lyonnais Securities (USA) Inc., a wholly-owned subsidiary of Paris-based Credit Lyonnais, is engaged in investment banking and broker/dealer activities. CONTACT: Brian Corris Head of Research (212) 408-5646 Libby Glazer VP/Communications (212) 261-7007 Steven S. Anreder Anreder and Company (212) 421-4020 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion