Brazil shrs dash early gains, hit by profit-takers
Reuters, Monday, November 10, 1997 at 17:42
SAO PAULO, Nov 10 (Reuters) - Brazilian shares erased nearly all their early gains by late afternoon Monday, as investors lost enthusiasm for the new austerity plan announced by the government and profit-takers swooped in, dealers said.
"At first, the market reacted well to the measures but now it is evaluating the medium and long term impact and you can't be very optimistic. People are predicting a recession," said Marcelo Porto of Concordia brokerage.
Sao Paulo's 51-share Bovespa index (INDEX:$BVSP.X), which had risen 4.9 percent shortly after the open, was up a scant 0.28 percent
by 1704 local/1904 GMT, an hour before closing.
Volume remained thin at 432.5 million reais ($393.2 million) as many players stayed away on lingering doubts about the stability of Brazil's financial markets despite a 51-point package of measures aimed at shoring up the real currency.
After rising on initial opening enthusiasm over the plan, investors lost enthusiasm quickly, and day-traders began taking profits late in the afternoon as weak volume made it next to impossible to support the early gains, dealers said.
While the immediate impact of the measures will be positive and restore some confidence, the moves could spark a recession that would likely cap stock prices in the medium and long-term, they said.
"Politicaly, it is good, but this package cannot be considered good for the bolsa. It's recessionary," said a broker with local Geral do Comercio brokerage.
Nonetheless, the Bovespa may still end the session in the black as investors come in ahead of the close to snap up bargains, brokers added.
The profit-taking was led by benchmark Telebras preferred (SAO:TEL_.P), which had erased all its gains for the day before rising again to stand 1.4 percent higher at 108.50 reais.
Eletrobras preferred B (SAO:ELE_P.B), among the most stable of blue chips, was up 3.09 percent at 500 reais, roughly where it had been all day.
Petrobras preferred (SAO:PET_.P) was up 2.27 percent at 225 reais while Cia Vale do Rio Doce preferred (SAO:VAL_.P) was off 0.05 percent at 20.70 reais.
--E-mail: james.craig@reuters.com
Copyright 1997, Reuters News Service |
