ADR REPORT - Emerging market highlights - Oct 1
Reuters, Thursday, October 01, 1998 at 16:52
ADRS CAUGHT IN MARKET SELL-OFF, FOCUS SHIFTS TO BRAZIL
By Daniel Bases
NEW YORK, Oct 1 (Reuters) - Investors sold ADRs -- American
Depository Receipts -- Thursday, anxious about prospects for a
global economic slowdown and the crucial Brazilian presidential
election on Sunday, October 4.
"There is a lot of indiscriminate distress selling out
there," said one harried trader. "This is the great unwind and
a lot of hotshot traders are getting wiped out. This is a blood
bath."
In late trading, the Dow Jones Industrial Average (INDEX:$INDU)
was down 245.88, or 3.15 percent, at 7596.74 on the prospects
that third quarter earnings will be weak.
The Bank of New York index <.BKADR> of 439 leading ADRs was
down 3.02 points, or 3.25 percent, to 90.03.
Latin America, and Brazil in particular, are now at the
front lines of the battle to either stop or slow down the
economic debacle that started in Asia and spread westward.
Brazilians head to the polls Sunday to begin their
presidential election process and analysts say if incumbent
Fernando Henrique Cardoso does not win convincingly, a major
watershed will have burst.
"The focus is clearly on Brazil's election, the success of
Cardoso. It will have an effect on the rest of Latin America,"
said Richard Casey, emerging market strategist at Donalson
Lufkin & Jenrette.
"People are just trying to preserve capital, they're not
analyzing a country's risk. Nobody wants to commit to emerging
markets, so they're going to treasuries."
The ING Barings index of leading area ADRs <.LAT> was off
7.60 points, or 6.75 percent, at 104.93.
Brazil's Bovespa index (INDEX:$BVSP.X) fell 9.6 percent. The
leading Brazilian ADR, Telebras (NYSE:TBR) lost 5-15/16 to
63-1/16. International telecoms, as a group, were victims of
the big sell-off.
"In Brazil, its not only if Cardoso wins, but the margin of
victory (in the first round of voting), as well as how quickly
he spells out an austerity plan," said another trader who added
that the volume of trades picked up from recent lows.
Copyright 1998, Reuters News Service
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