LatAm stocks run into fresh losses on year-low Dow
Monday August 31, 8:49 pm Eastern Time
(updates with closing prices, recasts, pvs Sao Paolo)
By Maja Wallengren
MEXICO CITY, Aug 31 (Reuters) - Wall Street's spill on Monday gave Latin American
markets a bloody nose, adding to the pain for regional stock markets already bruised by Russia
and Asia's financial crises.
The 6.7 percent plunge on the Dow Jones Industrial Average, its second worst ever, led to
almost equally dramatic losses south of the border.
Mexican stocks fell more than five percent to below the important 3,000 point level, Chilean
share prices fell more than four percent to their lowest level since late 1993, and the Brazilian
market slid four percent lower.
Argentina and Venezuela escaped relatively unscathed compared to neighboring nations.
''The Dow broke today ... erasing practically all its gains ... for the year, and this is affecting our
ADRs (American Depositary Receipts),'' Arka brokerage analyst Esteban Rojas said in Mexico
City.
Investors fled markets left nervous over Russia's uncertain economic future and political
standstill.
In Russia, the Communist-led parliament rejected President Boris Yeltsin's request to reinstate
Viktor Chernomyrdin as prime minister and trade in the rouble on Russia's main exchanges was
suspended.
Chernomyrdin was sacked by Yeltsin in March but brought back a week ago as acting prime
minister and said Russia is ''on the verge of economic and political breakdown.''
In MEXICO the IPC index also suffered from a steep increase in interest rates and closed down
162.21 points, or 5.14 percent, to 2,991.93 points in a sudden pummeling at the end of trade.
Arka's Rojas said traders were expecting a steep hike in interest rates in the scheduled primary
auction of government treasury bills.
But the auction was declared void for the first time since the 1995 economic ''tequila'' crisis after
a maximum bid of 50.50 percent was placed for the benchmark 28-day paper, almost double
that of last week's rate of 27.16 percent.
In BRAZIL, shares continued to extend losses on concern that the turmoil in Russia drove
investors out of emerging markets and heightened pressure on vulnerable currencies.
Sao Paulo's key Bovespa index of the 58 most-traded shares closed down at 6,472 points.
Losses were kept in check by heavy buying of Telebras (TELB4.SA) preferred in what traders
speculated was government intervention.
''Three big banks were doing heavy Telebras buying trying to sustain the market,'' a trader at a
local brokerage said. ''It looks like intervention.''
Telebras preferred slipped 4.79 percent to close at 83.50 reais. Telebras common (TELB3.SA)
led declining shares tumbling 8.53 percent to close at 59 reais.
In CHILE, shares at Santiago's IPSA (^IPSA - news) index of the leading 40 stocks tumbled
4.27 percent to 62.27 points and the broader IGPA (^IGPA - news) gauge fell 3.01 percent to
3257.38 points, but other indexes did not alter their preliminary closes.
The IPSA ended at its lowest point since December 13, 1993, while supermarket operator
Unimarc (UNR - news; SMU.SN) led share losses, plunging 42.86 percent to 20 pesos.
Volume was extremely low at $7.8 million. Ten stocks rose, 63 fell and 20 ended unchanged.
In ARGENTINA, stocks on the local bourse slipped slightly less than most of its Latin American
counterparts, but the MerVal (^MERV - news) index closed down 1.66 percent at 358.49
points, and finished down 39.11 percent for the month of August.
''There were lots of buy orders coming in. I think investors were liking the prices stocks were at.
But as soon as the Dow started to plunge the trend completely reversed,'' said trader Carlos
Presta at Mercurio brokerage.
In VENEZUELA share prices closed broadly flat in shallow trade, but traders expected the
Dow Jones' historic plunge, which came mostly after the bolsa's close, will weigh in Tuesday's
session.
According to preliminary figures, the 15-share (^IBC - news) index closed ahead 0.2 percent at
2,904.02 points. Among traded issues, five fell, four rose and 17 closed flat.
''Venezuela is just a too high risk investment,'' said Exterior broker Reinaldo Uribe, commenting
on the lack of investor interest in local stocks, which have dropped more than 70 percent since
the start of the year.
More Quotes
and News:
BUSE Merval Indx (Buenos Aires Stock Exchange) (^MERV - news)
IBC INDEX (Caracas Stock Exchange) (^IBC - news)
SASE Gral Index (Santiago Stock Exchange) (^IGPA - news)
SASE Select Inx (Santiago Stock Exchange) (^IPSA - news)
SUPERMERCADOS (NYSE:UNR - news)
Related News Categories: international, US Market News
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