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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (31004)	4/7/2003 9:08:54 PM
From: Box-By-The-Riviera™	Respond to of 74559

that pretty darned interesting. but... do they realize what that means now, to have a sound dollar? thanks for posting it.

To: TobagoJack who wrote (31004)	4/7/2003 9:56:18 PM
From: elmatador	Respond to of 74559

"moving out of cash and channelling funds into Brazilian bonds." Real gains ground against dollar By Richard Lapper, Latin America editor in São Paulo Published: April 8 2003 1:07 \| Last Updated: April 8 2003 1:07 Brazil's real gained ground for the eighth successive day on Monday to reach R$3.15 against the dollar amid signs that money managers were moving out of cash and channelling funds into Brazilian bonds. Industry figures indicate that more money has been pumped into emerging market bonds in the first quarter of this year than in the whole of 2002, with managers keen to access higher yields offered by creditors such as Brazil. news.ft.com

To: TobagoJack who wrote (31004)	4/7/2003 9:57:54 PM
From: elmatador	Respond to of 74559

Conflict fuels Latin American markets By Richard Lapper, Latin America Editor Published: April 7 2003 23:23 \| Last Updated: April 7 2003 23:23 <<We are winning, Jay :-) >> When the allied bombardment of Baghdad began on March 20, it seemed logical to expect that Latin America's financial markets would face a turbulent time. But the region's markets have prospered during the conflict. Bond spreads have fallen, currencies strengthened and, in Brazil at least, life has returned to equity trading with the Bovespa up by about 10 per cent. One reason is that the war has not had the feared impact on oil prices, softening any impact on the heaviest importers: Brazil, Chile and some smaller Caribbean and Central American countries. After rising sharply on the expected disruption of supplies, prices fell when coalition forces seized control of oil fields in the early days of the conflict and have been more or less steady in the past two weeks. But, perhaps more importantly, the expected increase in investor risk aversion has simply not occurred as the war has seemingly gone according to plan. On the contrary, emerging markets are still back in fashion among investors as they look to find yields and returns that are unavailable in depressed mainstream markets. Figures released last week by Emerging Portfolio.com Fund Research (EP.comFR) covering 171 emerging market funds showed inflows of $948m in the first quarter of this year. The funds contain about $9.7bn in assets and the rate of increase was the fastest since 1995. EP.comFR also notes a revival of interest in individual equities, with the inflow of $150.9m in the past three weeks ending a long period of outflows. Latin America has been a big beneficiary, helped initially at least by its distance from the war. In addition, the local outlook has been brightening, especially in Argentina and Brazil. Argentine yield spreads over US Treasuries have fallen by 10 percentage points since the war began amid signs the economic recovery is gathering pace and a debt rescheduling deal might be possible before the end of the year. The bank controls imposed in December 2001 were lifted ten days ago, which helped bring the peso below three to the dollar for the first time in nearly a year. In Brazil last week, the government of President Luiz Inácio Lula da Silva won its first big test with congress when legislators approved constitutional changes that should eventually grant greater autonomy to the central bank. Bond spreads dropped below 1,000 basis points for the first time since May 2002 and the real made further gains. There are signs the rally could continue. Emergiong market investors expect to receive upwards of $6bn in the next four months from interest and principal repayments on bonds, much of which could be ploughed straight back. A lot of that money could end up in Brazil because its yields are still at relatively attractive levels - more than two percentage points above the EMBI+, a widely used emerging markets bond index. There are other positive "technicals" as well. In a note published on Monday, JP Morgan says investors are overweight in Latin America only to a limited extent. But the same note also points out that optimism is premised to some extent on a relatively trouble-free end to the war. "We remain concerned that the consensus view shies away from discussing the impact on financial markets of any scenario for the Iraq war other than a smooth coalition victory, when the aftermath may bring a host of challenges," says the report. We have been warned. And in Latin America at least it pays to expect the unexpected. As Celso Pinto, editor of the Brazilian financial daily Valor, puts it: "Since the Thai crisis of 1997, cycles of optimism on emerging markets . . . have been swallowed by a new crisis every sixmonths."