Latam stocks leap as Brazil outlook brightens
Reuters, Friday, October 23, 1998 at 07:41
By Michael Christie
MEXICO CITY, Oct 22 (Reuters) - Most Latin American markets
leaped on Thursday on hopes Brazil would soon get international
credit lines to protect it from a currency meltdown while
domestic news in Mexico and Venezuela gave an added shot of
adrenaline to the bolsas there.
With International Monetary Fund officials seeing a
multibillion-dollar financing deal within two weeks, Brazil's
Bovespa index in Sao Paulo closed 3.4 percent higher at 7603
points after a late surge.
Brazil faced massive capital flight after investors thought
it might have to follow Russia's lead in mid-August and devalue
its currency, the real.
But the heat on Brazil has since cooled after promises of
loans from the IMF, which Director Stanley Fischer suggested
could amount to $30 billion, and pledges by Brazil of measures
to slash its 7.0 percent of gross domestic product deficit.
"People are confident about the (fiscal) measures and the
(loan) package that should be coming," a trader in Brazil said.
The positive outlook, after months of uncertainty and
turmoil that had put the global economy on the brink of a
recession, also helped Argentine shares to end sharply higher.
The MerVal index in Buenos Aires climbed 4.37 percent to
close at 463.36 points with traders and analysts noting that
IMF endorsement of any Brazilian financial plan must mean it
was a good one.
Likewise in Chile, where the IPSA index ended 2.83 percent
higher at 68.72 points.
In Mexico and Venezuela, local developments added spice to
the cheer.
In Mexico, the increasing likelihood of a deal over $60
billion in bad bank loans sent banking shares flying up to 10
percent higher, taking some of the pain off their near 80
percent plunge so far this year.
News reports said the government and Congress were close to
agreement on a package of discounts for small mortgage holders
in return for turning into public debt the $60 billion of bank
debt piled up in the Fobaproa fund since the 1995 peso crisis.
The Fobaproa controversy, which has raged since March,
allegations of money laundering in the United States and the
general ill financial condition of the banks have slaughtered
their share value this year.
Mexico City's IPC share index gained 4.6 percent to end at
4025.99 points while the peso managed to close below 10 to the
dollar for the first time since Sept. 2.
In Venezuela, it was a poll showing a Yale-educated
economist had pulled even with former coup leader Hugo Chavez
in the country's presidential race which helped the battered
Caracas stock exchange grab back some terrain.
The IBC index added 2.1 percent to close at 3381.98 points
after publication of the Mercanalisis survey, which gave
Henrique Salas, the businessman's preferred candidate, 38
percent against 39 percent for Chavez.
mexicocity.newsroom@reuters.com))
Copyright 1998, Reuters News Service |
