Brazil stocks slip, turnover hit by scandal
Reuters Company News - July 31, 2000 17:19
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By Andrei Khalip
SAO PAULO, July 31 (Reuters) - After holding their own for most of the day,
Brazilian shares slipped on Monday during the last minutes of trading on what
traders said was tiny turnover amid investor fears caused by a simmering
political scandal.
"The market is scared with the embezzlement scandal," said Marcos Basaglia, a
trader with the Banespa brokerage. "Volume was ridiculously small. If it
continues like that tomorrow, the market may tumble."
Brazil's benchmark Bovespa stock index closed 0.2 percent down at 16,455
points after erasing gains of around 1 percent. Only around 350 million reais
($197 million) worth of stocks changed hands, compared with July's daily
average of over 624 million. The Bovespa finished July down 1.6 percent and
has accumulated a loss of 3.7 percent since the start of the year.
The market is bracing for potential storms as lawmakers and justice officials
return to work Tuesday after a winter recess with a potentially explosive
agenda that could rattle investors.
Congress will ponder whether to dig deeper into a multimillion-dollar
embezzlement scandal that could taint the government. And the Supreme Court
is expected to decide a case that could force the government dish out as much
as $40 billion.
Despite the last-minute turbulence, pay TV and Internet play Globocabo ended
the day 2.2 percent higher at 2.8 reais, which traders attributed to rumours of a
possible greater weighting for the stock in the index and a potential initial public
offering by its parent, the Globo financial empire.
"Globocabo also rose thanks to options trade," said Bruno Otero, a trader with
Banco Santander. Globocabo's options are one of the most traded in the local
market.
Telecommunications companies mostly edged higher Monday, helped by a
healthy 2.8 percent rise in U.S. technology stocks, but the most liquid telecom
issue, Telemar , closed only 0.1 percent higher at 42.7 reais, erasing larger
gains.
"In such a small volume, it is so easy to get those end-day swings. A couple of
selling deals and you have no rise," said another trader.
State oil giant Petrobras for the first time in many days reversed declines
caused by the company's offer to sell 28.5 percent of its voting stock. The
share closed 0.4 percent firmer at 46.8 reais.
Traders said the weak turnover was likely to continue unless big pension funds
started buying.
"But for that, prices must fall lower to become attractive for the funds," Basaglia
added. |
