Latin Markets Surge as Y2K Fears Subside

So much for those Y2K fears hurting emerging markets.

Latin American stock markets soared Wednesday, lifting some indexes to their highest levels in more than five months, as local and foreign investors poured in.

The Mexican market’s main index rocketed 314.06 points, or 5.7%, to end at 5,793.85, its highest close since July 21.

Brazil’s Bovespa stock index surged 584.07 points, or nearly 5%, to 12,346.67, highest since May 13.

In Argentina the Merval index rose 2.3% to 565.60.

Despite concerns in recent months that investors might pull out of emerging markets as the new year neared--on worries about potential computer glitches tied to the year 2000 computer bug--more investors appear to be positioning themselves for what is expected to be strong economic growth in many developing nations in 2000.

Third-quarter corporate earnings reports showed many Latin American firms have recovered faster than expected from high interest rates and regional recessions.

“It is clear that the two biggest economies in the region [Mexico and Brazil] will grow next year, which makes this a good moment to buy cheap assets,” said Wayne Perkins, head of Latin American equities at Chase Manhattan Corp.

“A lot of people were expecting money to flood into Brazil [after] the Y2K,” said Julio Ziegelmann, money manager at the Brazilian unit of Fleet Boston Corp. “It seems investors are coming early.”

Latin markets also may be gaining as fears have faded on Wall Street that the Federal Reserve might embark on a long campaign of interest rate increases.

In Mexico, Bancomer, the country’s second-largest bank, soared almost 10% on Wednesday. Last week the bank said third-quarter earnings were $50.1 million, reversing a $40.4-million loss last year.

TelMex, the Mexican phone giant, also was hot. The stock has lately become something of an Internet play after Microsoft last month joined TelMex in a Spanish-language Web portal venture.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Hot TelMex

Shares of TelMex, the Mexican phone giant, led the rally among Latin American shares of the New York Stock Exchange on Wednesday. Monthly closes and latest:

*

Wednesday: $93.63, up $4.63

*

Source: Bloomberg News