Good post from the Yahoo thread
Message 3877 of 3881
Reply
reality/perception
divergence, etc.
synthetic12
Aug 30 1998
3:03PM EDT
Brazil never developed a "speculative bubble" and does not have
a banking sector swamped with bad loans arising from such.
Brazil is not a commodities-based economy.
Brazil has "whopping" currency reserves. (Currency reserves
around the world noted recently, from memory: Russia $12B,
Venezuela $16B, Canada $21B, Brazil $70B, Hong Kong
$96B.)
Brazil's economy continues to grow despite global turmoil.
Brazil has low inflation.
In the VERY UNLIKELY event that the Brazilian currency were
to devalue, economists have stated it would not do so by more
than 10%, which eventuality has already been GENEROUSLY
factored into TBR price. Dollar denominated P/E ratios remain
and will remain extremely relevant!
In analysis after analysis, article after article, more and more the
(notoriously sensationalist) financial press is thankfully and finally
getting around to noting that actual performance and prospects
are going one way in Brazil (up) while valuations are going the
other (down), which divergence cannot continue forever.
And speaking of divergences, it certainly was a solace on Friday
to see all the world down, and Latin America, and Brazil UP.
Recent WSJ editorial states that Brazil is considered to be 2nd
only to the US in the world today in terms of being an attractive
corporate investment prospect. (Witness mega-investments in all
sectors in Brazil by US and other firms in the past 12 months,
despite Asia.) Also, recent disclosures by US banks invested in
the area indicate that their Brazilian investments continue to yield
strong profits.
Yes, perception and reality are estranged at the moment.
However, they are due for a reunion as never before! Once
greed returns from holiday, perception and reality are sure to get
back together. (My read is that greed will return upon any of the
following, among others: Japanese banking reform and tax relief,
Russian debt restructuring, hint of strength in commodity prices,
Cardoso re-election, etc., etc. - stay tuned.)
|
