Bull Market Intact for LatAm Equity: Citi

LatAm equity markets continued mixed Friday, with the Bovespa down 1.8% but the Mexican bolsa rebounding modestly. Citi estimates that MSCI Latin America fell by 5.9% in dollar terms Thursday, the third worst one-day decline since immediately after the 9/11 terrorist attacks in 2001, but not as bad as February 27, when it declined 6.7%. “Crucially, as earlier this year, this latest meltdown has had nothing to do with events in Latin America itself,” says Citi, which has long been calling for a correction while maintaining that longer term, conditions are bullish. “This correction will play out similar to all of the earlier corrections in this bull market; we do not believe it is the start of a new bear market,” says Citi. “If current events do not pull the US economy into recession or cause the global economy to slow sharply, the current correction will simply create a new buying opportunity for Latin American stocks,” it adds. Citi tips the following defensive stocks for high dividend yields and low volatility: CTEEP, Eletropaulo, AES Tietê, Cemig, Entel, Ultrapar, Cemex, Natura, Bradesco, Embraer, AmBev, Grupo Televisa, Datasul, Copasa, Tele Norte Leste, Industrias Bachoco, Gruma and Walmex.