Latin Stk Mkts Post Worst Monthly Year-To-Date Fall In Aug
August 31, 1998
Dow Jones Newswires
By MARGARITA PALATNIK
Dow Jones Newswires
NEW YORK -- Latin American stocks ended August with one of their worst
monthly declines ever, hurt by troubles around the world, market watchers
said.
"This is the worst month in a long time. The October crisis pales in
comparison," said Dan Selcow, emerging market fund manager for Nomura
Asset Management, in reference to October 1997, when Asian economies
came under pressure.
The largest Latin markets posted most of their year-to-date losses during the
month of August.
Brazil declined 39.55% during the month, for an accumulated 36.5% fall so far
this year; Mexico lost 29.5% in August, as part of a 42.8% drop for the first
eight months; Argentina declined 39.1% in August and 47.9% year-to- date;
and Venezuela fell 40.07% during the month, as part of a 66.45% decline
year-to-date.
August's performance was significantly worse than the last time Latin American
stocks were subject to a massive sell-off.
In January 1995, following the devaluation of the Mexican peso, Mexico's key
IPC index lost just 11% of its value.
Specifically, Latin stocks' awful performance this month was triggered by a
devaluation of the Russian ruble, and the subsequent collapse of that country's
financial markets, analysts said. Russia's troubles came after months of bad
news from Asian economies, which have been hurting Latin American markets.
The falling ruble prompted an emerging market sell-off by investors who either
dumped any and all emerging market shares, or needed to raise cash to cover
positions, according to observers.
"People are spooked, and with emerging markets, if one goes, they all go, so
people just say, 'I'll buy Microsoft," resorting to a flight to quality, said
ValueQuest financial analyst Anita Killian, based in Marblehead,
Massachusetts.
-By Margarita Palatnik; 201-938-2226; margarita.palatnik@cor.dowjones.com
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