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Bovespa to rise 10 percent in 2014, Mexico IPC to rise on reforms

Brazil's benchmark Bovespa index will not quite make up for 2013's losses next year, a Reuters poll showed on Thursday, while energy reforms will help Mexican shares post modest gains. Brazilian stocks were among the world's worst performers this year, the Bovespa having lost 18 percent so far compared with a 25 percent gain in the S&P 500 index and a 10 percent rise in London's FTSE 100. Deteriorating government finances, weak economic growth and persistent inflation pressure have kept many investors at arm's length from Brazilian shares.

The Bovespa was also dragged lower by expectations the US Federal Reserve would begin to taper its monetary stimulus program, which had supported global demand for riskier assets. Analysts in the poll, conducted over the past week, predicted the index would rise to 55,000 by mid-2014, a 10 percent rise from Wednesday's close, and hit 59,000 by year-end. Still, that would fall short of the its 2012 closing level of 60,952.

Nearly every analyst suggested a Fed decision on tapering was the major overhang threatening the Bovespa in 2014. While the majority of economists see that happening in March, some are warming up to the idea that it could happen as early as this month or at the January policy meeting, a Reuters poll showed on Wednesday.

"You're best off picking companies that are dollar-oriented since the dollar is likely to strengthen (after tapering)," said Andre Paes, an analyst with Infinity Asset Management, who suggested exporters like iron-ore producer Vale SA, steelmaker Usiminas, and pulp maker Fibria Celulose SA. Analysts also highlighted a number of domestic risks that could keep local shares in check.

"We will spend the whole year concerned about economic growth, inflation, a possible ratings downgrade, elections - there are a thousand things that could happen to negatively affect the market here," said Ariovaldo Santos, a broker with H.Commcor in Sao Paulo. Mexico's IPC index, which has fallen 3 percent this year, should rise to 46,600, the poll showed, a 10 percent rise from Thursday's closing levels.

Copyright Reuters, 2014


Index Closing Chg%
Arrow DJIA 17,778.15 2.43
Arrow Nasdaq 4,748.40 2.24
Arrow S&P 2,061.23 2.40
Arrow FTSE 6,466.00 2.04
Arrow DAX 9,811.06 2.79
Arrow CAC-40 4,249.49 3.35
Arrow Nikkei 17,210.05 2.32
Arrow H.Seng 22,832.21 1.09
Arrow Sensex 27,126.57 1.56

ICT 2014

Foreign Debt $61.805bn
Per Cap Income $1,386
GDP Growth 4.14%
Average CPI 8.6%
Trade Balance $-2.309 bln
Exports $1.957 bln
Imports $4.266 bln
WeeklyDecember 18, 2014
Reserves $14.04 bln