Portugal Telecom Sinks To Year-Low On
Brazilan Worries
By SARAH J. RHYDDERCH
Dow Jones Newswires
LISBON -- Telecommunications company Portugal Telecom SA (PT)
sank to its lowest level since the start of the year earlier Friday as investors
continued to punish the stock for its recent Brazilian investments.
"It's an overshoot, people are panicking because of Brazil," Pedro
Rodrigues, analyst at Titulo brokerage in Lisbon said. "Portugal Telecom is
a special case because its Brazilian investments are still fresh in people's
minds. Other Portuguese companies have made investments there but
aren't being penalized nearly so much."
At 1404 GMT, Portugal Telecom was down 550 escudos (PTE)
($1=PTE173.59), or 7.1%, at PTE7,250 on volume of 1.4 million shares.
That puts the stock down PTE4,275, or 37%, from its all time high of
PTE11,525, reached at the peak of the rally on the Lisbon stock market
earlier this year. Earlier in the session, the stock hit a year low of
PTE7,001.
The renewed downturn was triggered by fresh fears over the financial
situation in Latin America.
At an extraordinary meeting late Thursday, the Brazilian Central Bank's
Monetary Policy Committee decided to raise the Tban Interest Rate, the
ceiling rate at which the monetary authority loans money to commercial
banks, to 49.75% from 29.75% in attempt to stem the outflow of foreign
capital and defend the real. The basic rate, or TBC, was kept at 19%.
In July this year, Portugal Telecom paid a $3.01 billion - 226% more than
the minimum bid price - for a controlling stake in Telesp Celular as part of
the privatization of Brazilian state owned holding Telecomunicacoes
Brasileiras SA (TBR) known as Telebras. |
