ADR REPORT - Emerging markets highlights - Sept 3
Reuters, Thursday, September 03, 1998 at 16:26
TELEBRAS DROPS AFTER MOODY'S CUTS BRAZIL'S CREDIT RATING
NEW YORK, Sept 3 (Reuters) - Brazil's telecommunications
behemoth Telebras S.A. (SAO:TEL_.P) (NYSE:TBR) slid nearly 10
percent in Thursday afternoon trading after the country had its
credit rating cut and investors lost even more in confidence in
emerging markets.
"It also doesn't help that the Dow is down," said one
dealer.
The Dow Jones Industrial Average was down 171 points or
2.20 percent at 7610, following the slide suffered by local
markets in Argentina, Brazil and Venezuela.
Moody's Investors Service downgraded Brazil's country
ceiling for foreign currency debt to B2 from B1, among other
debt, heightening worries about its currency and economy.
It also cut the country ceiling for foreign currency for
Venezuela.
An official at rival credit-rating agency Standard & Poor's
told Reuters the two countries were the least creditworthy in
the region.
"This is bad," said another trader.
"Our economist was surprised by this," said another, adding
that Moody's was nevertheless considered to have a conservative
perspective.
"Things are active," he added.
Meanwhile, Latin American finance officials meeting at the
International Monetary Fund in Washington urged investors not
to bow to overwhelming pressure to abandon emerging markets.
The officials said many of the region's countries were
prepared to withstand the turmoil in global markets, which has
been aggravated by Russia's worsening financial crisis.
Investors have begun to worry about the possible effects
that Colombia's de facto currency devaluation might have on
Venezuela's bolivar and the sucre in Ecuador.
Shaun Roache, an emerging markets strategist at ING Barings
in London, told Reuters earlier in the day that the best
defensive asset allocation for a fund dedicated to the region
would be to have 20 percent in cash.
Roache also recommended keeping the remainder in stocks
that follow benchmark indices like those set by Wall Street
firm Morgan Stanley.
Copyright 1998, Reuters News Service |
