Te CSI 300 rose 2.09% through Tursday, remaining in a Confirmed Uptrend with one distribution day. Te index consolidated constructively for the week. Its next resistance is at ~4,100 and support is at ~3,900
Symbol: BPC.BR
LATAM Weekly Summary
Key points from this week’s report
Brazil’s main equity benchmark is still attempting to rally, although it has fallen below the 50-DMA. The Bovespa index could remain range bound until clear progress is made regarding approval of the proposed pension reform.
Mexico’s stocks pulled back last week and were down 0.7%. Although the IPC35 index is hitting resistance at the 200-DMA, the market remains in a Confirmed Uptrend.
Actionable Focus List recommendations include BTG Pactual ( BPC.BR; BPAC11:BZ ), Interconexion Electrica ( ISA.CO; ISA:CB ), and IRB Brasil Resseguros ( IRB.BR; IRBR3:BZ ).
Global Focus Emerging
Te CSI 300 dropped -1.81% for the week on decreased volume. Te market remains in a Confirmed Uptrend with no distribution days. It was not a surprise the index pulled back after a four-week gaining streak, and the index remains constructive as long as key support holds and distribution days remain low. Te next immediate support is at ~3,900, and resistance at ~4,100 for the CSI 300
LATAM Weekly Summary
Key points from this week’s report:
Brazil’s Bovespa index is attempting to rally. Wait for a follow-through day before adding significant risk. Approval of pension reform continues to be the key overhang.
Mexico’s market was upgraded to an Uptrend on March 20 and has been rising steadily since then, despite negative macro headlines.
Actionable stocks include three recent additions to our Focus List: IRB Brasil ( IRB.BR; IRBR3:BZ ), BTG Pactual ( BPC.BR; BPAC11:BZ ), and Interconexion Electrica ( ISA.CO; ISA:CB ), as well as Globant ( GLOB ) and BK Brasil ( BKB.BR; BKBR3:BZ ).
Off the list, stocks of interest include Grupo Financiero Banorte ( GTB.MX; GFNORTEO:MF ), Walmart de Mexico ( WAV.MX; WALMEX*:MF ), Petroleo Brasileiro ( POB.BR; PETR4:BZ; PBR ), and Engie Brasil Energia ( T3B.BR; EGIE3:BZ ).
Best sectors in the region over the past four weeks include Energy, Technology, Consumer Staple, and Basic Material.
Global Focus Emerging
The CSI 300 rose 4.9% on increased volume and the market remained in a
Confirmed Uptrend with no distribution days. China’s manufacturing PMI for
March returned to expansion, stimulating the index to gap up and break out of
a four-week consolidation. Multiple favorable policies and news in the following
days, such as optimistic expectations for China-U.S. trade talks, continued to
support the gains. The CSI 300 breached key resistance at ~ 3,900 on increased
volume, which leads us to believe that another round of rallying can be expected.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq reversed off early session highs yesterday but managed to close mid-range. Both are now testing resistance near October 2018 highs and are likely set to consolidate sharp gains from this past week. Near-term support remains the rising 21-DMA (S&P 500: 2,819; Nasdaq: 7,684). Distribution fell to five days on each index, with another day set to expire on each at tomorrow’s close.
LATAM Weekly Summary
Argentina: Uptrend Under Pressure
Brazil: Rally Attempt
Mexico: Confirmed Uptrend
Commentary
Brazil’s benchmark index ended the week with a gain of 1.8%. The Bovespa bounced off Wednesday’s 91,903 low and
is attempting to rally. We are now looking for the Brazilian market to record a follow-through day to upgrade Brazil to an Uptrend.
We believe that the progress on the approval of the country’s proposed pension reform could trigger this follow-through
day
LATAM Weekly Summary
Argentina: Uptrend Under Pressure
Brazil: Downtrend
Mexico: Uptrend
Commentary
Brazil’s benchmark index ended the week with a loss of 5.5%. The Bovespa had a sharp reversal after hitting resistance at the
100,000 psychological level. News of the arrest of former President Michel Temer pushed the Bovespa index below the 50‐DMA
line. As a result of poor market action and an elevated number of distribution days, on Friday, March 22, we downgraded Brazil
from an Uptrend Under Pressure to a Downtrend. Next support levels: 92,000 and 90,000.
LATAM Weekly Summary
Argentina: Uptrend Under Pressure
Brazil: Uptrend
Mexico: Rally Attempt
Commentary
Brazil’s benchmark index ended the week with a gain of 3.96%. The Bovespa hit a new all-time high after it bounced off 50-DMA support. On Wednesday, we moved the market to a Confirmed Uptrend from an Uptrend Under Pressure as the index reclaimed its previous rally high and approached the 100,000 psychological level. With most of the large caps nearing breakouts or moving into respective buy ranges, we advise investors to add to positions.
LATAM Weekly Summary
Argentina: Uptrend Under Pressure
Brazil: Uptrend Under Pressure
Mexico: Downtrend
Commentary
Brazil’s main equity benchmark rose 0.8% last week and found support near the 50‐DMA. Last week was short due to Brazil’s
Carnival holiday and trading started only on Wednesday. Due to the elevated number of distribution days (seven) and the lack of
new breakouts in leading stocks, we recently moved Brazil’s market to an Uptrend Under Pressure from a Confirmed Uptrend.
Brazil’s stocks were under pressure last week on concerns over how much lawmakers may water down President Jair
Bolsonaro’s proposed pension system reform. Bolsonaro warned the country cannot take all year to vote on pension
reform, and that not addressing the biggest threat to public finances could lead to economic turmoil. The Economy Ministry
noted last month that leaving the pension system as is could trigger a recession starting in H2 2020.
Brazil’s economy grew just 0.1% in the fourth quarter of 2018 from the prior quarter. The quarterly expansion of Brazil’s
GDP was below the 0.2% median estimate in a Reuters poll of economists. The third quarter GDP figure was revised down
to 0.5%, from a previously reported 0.8%.
