Brazil markets set to swing on political jitters
Reuters Company News - August 03, 2000 09:04
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SAO PAULO, Aug. 3 (Reuters) - Brazilian shares were set for a
roller-coaster ride on Thursday as concern over a political
scandal that's threatening to tarnish the presidency offsets
optimism over healthy government finances, traders said.
Investors may tread carefully ahead of the sheduled testimony
later Thursday of former top presidential aide Eduardo Jorge
before Congress on an embezzlement scandal involving up to $100
million in public funds.
Offsetting the scandal-related jitters was the government's
announcement late Wednesday that it relaxed its fiscal targets for
2001 under an agreement with the International Monetary Fund.
"We should expect a lot of volatility in the market," said
Herminio Lucci, a trader at Fator Doria Atherino brokerage in Sao
Paulo. "The biggest issue today is Eduardo Jorge's testimony
before Congress," although the former chief-of-staff to President
Fernando Henrique Cardoso is not obliged to give testimony, Lucci
added.
"We'll be paying attention to how the market responds to the
government's announcement on the primary budget surplus," said
Lucci.
The Bovespa index ended a yo-yo session on Wednesday
0.15 percent higher at 16,315, registering a turnover that was
less than July's daily average.
* If Eduardo Jorge gives testimony before Congress, investors
will be watching for any evidence that could implicate Cardoso in
the political scandal over funds siphoned from an over-budgeted
courthouse construction project.
* After the close of trading on Wednesday, Brazil's government
said it lowered its primary budget surplus target to 3 percent of
gross domestic product, from the previous goal of 3.35 percent,
under an accord with the IMF.
* Shares in Banespa bank may decline after the
banking group said net profit in the first half of the year slid
44 percent compared with the year-ago period. "This was a very bad
number," said Lucci. Banespa attributed the drop to healthy
profits the bank posted in 1999 when interest rates skyrocketed to
45 percent, compared with 16.5 percent now.
*Shares in state-owned utility Cesp Parana could
extend a recent winning streak as investors seek to profit from
the company's privatisation, scheduled for November. The stock
shot up more than 12 percent on Wednesday. |
