Latin American Stocks Rise on Expectation of Brazilian Deficit Cutting
Wed, 6 Jan 1999, 12:21pm EDT
Sao Paulo, Jan. 6 (Bloomberg) -- Latin American stocks rose
on expectations Brazil's Congress will begin voting today on
measures to cut the budget deficit, paving the way for lower
interest rates.
Congress members had threatened not to vote on the 28-
billion reais package of spending cuts and tax increases until
they received money for the extra sessions. A court ruling
blocking the payments was overturned, clearing the way for voting
to begin.
''The focus today will be in the Congress,'' said Marcelo
Borges,'' who helps manage $50 million at Tudor Asset Management
in Sao Paulo. ''The market should open on a positive note today,
as the voting is expected to finally start.''
Brazil's Ibovespa stock index rose as much as 2 percent, to
7252.27 and Chile's Ipsa index rose as much as 0.5 percent, to
101.71.
Stocks moving in early trading in Brazil included Centrais
Eletricas Brasileiras SA, up as much as 4.4 percent, to 23.5
reais; Petroleo Brasileiro SA, rising as much as 2.9 percent, to
141.99; Telecomunicacoes de Sao Paulo SA, up as much as 3.7
percent, to 167 and Usinas Siderurgicas de Minas Gerais SA,
rising as much as 2 percent, to 3.04.
Chile
In Chile, Sociedad de Inversiones Oro Blanco SA rose as much
as 2 percent, to 1 peso, Gener SA, the utility company, rose 1.8
percent, to 113, Vina San Pedro, the country's third-largest wine
vineyard, rose 1.7 percent, to 2.95 and Enersis SA was up as much
as 1.6 percent, to 248.
Today the Brazilian Senate is expected to start voting on a
financial transaction tax, or CPMF, which is expected to raise
7.3 billion reais over 12 months. By cutting the $64 billion
deficit, Brazil may be able to slash interest rates, now at 29
percent, reducing company borrowing costs.
Stocks in Asia and Europe rose and are also expected to rise
in New York, which may bolster stocks in Latin America.
Brazilian bonds rose. A basket of Brazil's dollar debt rose
as much as 1.20 percent, according to J.P. Morgan & Co., while
emerging market debt overall rose 0.70 percent.
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