We are keeping our Hold recommendation on Companhia de Bebidas das Americas, or AmBev (ABV). The company posted slightly positive results for the second quarter of 2008 with excellent results in Brazil and in Argentina.

However, consolidated net income declined due to continued appreciation of the Brazilian real against the U.S. dollar. Nevertheless, parent company InBev's desire to acquire Anheuser-Busch Companies, Inc. (BUD) appears to be positive for the company.

However, the tighter monetary policy in Brazil, growing inflation in Argentina, the strength of the Brazilian real and its effect on the company's international sales, weak results in Central America, commodity costs and the difficult economic environment in the U.S. are matters of high concern.

We believe AmBev's strategy to focus on a few premium brands with higher quality and higher margins is already delivering strong results and will continue to boost revenues and earnings. This strategy enabled the