Latin American investors were cheered today by an upbeat start to the US corporate earnings season and rising commodities prices. Brazilian stocks moved higher on retail sales growth and strong results from PDG Realty, the homebuilder.

Homebuilders also helped Mexico’s benchmark IPC index gain, but equities analysts at Citigroup warned on valuations and “significant question marks” about the country’s economic fundamentals, cutting Mexican stocks to “underweight” from “overweight”.

“Having outperformed materially over the last twelve months, we fear that with leading indicators rolling over in the US, exports to the US will slow and there is no sign of the Mexican consumer taking up the slack”, Matthew Hickman wrote. “Going into the second half of 2010, we think it will be significantly more difficult for Mexico to outperform. Valuations no longer look as attractive as they did earlier in the year relative to Brazil”. Continue reading »