Brazil shares slump as political scandal feared
Reuters, 07/11/2000 18:19
By Andrei Khalip
SAO PAULO, July 11 (Reuters) - Brazilian stocks tumbled more than 3 percent on Tuesday amid rumors of a scandal involving a former top presidential aide which raised concerns about political stability, traders said.
"The day started well, but later all those rumors about important people involved in a scandal caused a lot of nervousness. Many people had been already prepared to sell after recent highs and the ball rolled," said John Carioba, chief trader with Indusval brokerage.
Brazil's benchmark Bovespa stock index (INDEX:$BVSP.X) plunged 3.4 percent to 16,881 points on a weak volume of 577 million reais ($320 million). The talk of a political scandal also affected the real currency and Brazilian debt prices.
Opposition politicians in Brazil are pushing to set up a Congressional probe into alleged links between former aide to President Fernando Henrique Cardoso, Eduardo Jorge Caldas, and judge Nicolau dos Santos Neto, who is accused of siphoning off funds from the construction of Sao Paulo's Labor Tribunal.
In blue chips, traders singled out state bank Banespa (SAO:BESP4), which slumped 5.5 percent to 51.5 reais on fears that a much-delayed privatization auction could now be postponed by years. It recovered a bit from earlier losses of over 6 percent.
Central Bank Director Eduardo de Freitas, who oversees the sale, has in the past few days commented on possible delays in the sell-off, saying they would leave "nothing but ashes" from the bank's present value and turn bidders away.
He told journalists late on Monday there were risks that the sale of Banespa, the oldest and largest public state bank, could be delayed until 2002 if the country's courts do not overturn two injunctions against the sale before September.
The only stocks that defied the market's slide were second-tier cellular phone firms, mainly from Brazil's northern area, whose rise traders attributed to Monday's announcement of a new set of rules that are set to reshape Brazil's phone market.
Brazil's telecommunications regulator Anatel said it plans to sell nine new licenses for cellular PCS services over the next two years, bringing in a host of new competitors and prompting consolidation in the industry.
As investors were chewing over the new rules, analyzing whom they would benefit in the end, shares in Telemig Celular (SAO:TMGC3) jumped up 9.4 percent to 36.1 reais, Tele Centro Oeste Celular (SAO:TCOC3) rose 3.1 percent to 8.3 reais and Tele Nordeste Celular (SAO:TNEP4) was up 2.9 percent to 7.2 reais.
The fall has nearly erased Bovespa's gains so far this month and reversed the year's gains. The index is still up 0.9 percent since the start of July but it is now 1.2 percent lower than at the start of 2000.
($1=1.8 reais)
Copyright 2000, Reuters News Service |
