Latin American stocks extend slide, hit by Asia
Reuters, Tuesday, August 11, 1998 at 22:13
By Michael Christie
MEXICO CITY, Aug 11 (Reuters) - Latin American stocks and
currencies were pummeled on Tuesday as investors fled emerging
markets, seeking shelter from financial storms in Asia that
could pound other developing economies.
From Argentina to Mexico, stock markets followed Wall
Street's lead in frantically clawing back some of their steep
losses just before the closing bell, when buyers rushed in
looking for bargains. But regional share markets still ended at
their lowest levels in months.
"This was a really complicated day, with a lot of investors
liquidating their portfolios," said analyst Hugo Dias Lourenco
at C&E Consultores in Buenos Aires.
Argentine stocks sunk to a 32-month low, down 4.35 percent
at 489.66 points, after earlier falling more than 7.0 percent
to 474.45 points.
The Japanese yen's drop to an eight-year low against the
dollar sowed near panic in Mexico's foreign exchange market,
with the peso plunging 14 centavos against the dollar in early
trade.
The free-floating peso eventually pulled back from the
brink and ended 8.6 centavos weaker at 9.1950/9.2000 to the
dollar, a historic low.
There seemed little immediate impact from a move on Monday
by Mexico's central bank to tighten monetary policy by
increasing to 50 million pesos from 30 million pesos the daily
amount it leaves the money markets short.
Mexican stocks ended at an 18-month low. The leading IPC
index closed 2.76 percent lower at 3628.45 points, having lost
more than 5 percent earlier in the day as Wall Street wobbled
and world markets stumbled over the weak yen.
Hugo Morales, director of analysis at Valores Bursatiles
Mexicanos, said the drop "had been a bit exaggerated."
"The Mexican markets have put up with a lot because the
macroeconomic conditions and those of the companies in general
are fine, but we're passing through a moment of extremely
strong external pressure," Morales said.
Tuesday's close was the lowest since Feb. 4, 1997, and
meant Mexican stocks have lost 30.6 percent of their value in
nominal terms and 39.2 percent in dollar terms so far this
year.
In Brazil -- seen as one of the most vulnerable of the
Latin American economies because of its gaping current account
deficit, weak fiscal discipline and an exchange rate widely
seen as overvalued -- shares dived to their lowest since
November.
The Bovespa, which groups the 58 most active shares, ended
down 4.14 percent at 8802 points.
In Colombia, Peru, Chile and Venezuela, stocks tumbled over
fears of Asian devaluations, financial trouble in Russia and as
foreign investors took flight.
Traders and analysts said they expected more of the same
for Wednesday and perhaps for the rest of the month, depending
on the yen's fate.
In Argentina, bolsa officials went on the air to warn
investors not to pull out.
"The bolsa could fall further, but investors should think
before selling because the rebound is always strong," said
Eugenio de Bary, president of the Buenos Aires Stock Exchange.
"This is a strong storm and Argentina need not be too
scared," he said.
mexicocity.newsroom@reuters.com))
Copyright 1998, Reuters News Service |
