Brazil Stocks Flat Early; Market Waits For Senate Vote
May 23, 2001
SAO PAULO -- Brazilian shares were flat in early, thin trade Wednesday as traders took a wait-and-see attitude while a Senate Ethics Committee meeting proceeds on whether two key senators should have impeachment proceedings launched against them.
Also, the central bank's expected hike in Brazil's basic interest rate late Wednesday - by 50 basis points to 16.75% - is keeping traders nervous, with some seeing a more aggressive hike of 75 basis points.
At 1330 GMT, the Sao Paulo stock exchange's Ibovespa index was up 0.5% at 14,904 points, compared with 14,828 points at Tuesday's close.
"People are trying to figure out where to place their bets," said a Sao Paulo trader.
The market is worried that Sens. Antonio Carlos Magalhaes and Jose Arruda could reveal a batch of dirty secrets if the Ethics Committee decides to start impeachment proceedings against them. They are charged with breaking rules on a secret vote.
More revelations would likely create a rallying cry for the opposition, which wants to set up a far reaching investigation into a host of corruption allegations.
An investigation would likely paralyze key fiscal and economic reforms.
Brazil's central bank has been hiking rates in recent months to contain inflation, which has been driven up by Argentine contagion of Brazil's real, among other factors. An electricity rationing program is also expected to put upward pressure on inflation.
Heavyweight stocks were weaker early. Bellwether Telemar's preferred shares were down 1.1% at 37.80 reals ($1=BRR2.30), while oil giant Petrobras' preferred shares were 1.2% lower at BRR58.80.
Preferred shares of cable television provider Globo Cabo - which are down about 50% on the year - were down 1.1% at BRR0.91.
-By Terry Wade, Dow Jones Newswires; 5511-3813.1988; terry.wade@dowjones.com |
