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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Naveen Kumar who wrote (355)	11/10/1997 6:08:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil to slash $734 mln from 1998 Telebras budget Reuters, Monday, November 10, 1997 at 13:17 BRASILIA, Nov 10 (Reuters) - Brazil's federal telecoms holding Telebras (SAO:TEL_.P">SAO:TEL_.P) will see its investment budget for 1998 cut by about 800 million reais ($734 million) as a result of a package of fiscal measures announced Monday. Jose Roberto Mendonca de Barros, executive secretary at the Finance Ministry, said Telebras (SAO:TEL) would account for 45 percent of 2.1 billion reais ($1.9 billion) which state companies must cut from their investment budgets as part of the fiscal austerity plan. Copyright 1997, Reuters News Service

To: Naveen Kumar who wrote (355)	11/10/1997 6:13:00 PM
From: Steve Fancy	Respond to of 22640

ING Barings revises 1998 Brazil forecasts Reuters, Monday, November 10, 1997 at 15:03 By Martin Langfield MIAMI, Nov 10 (Reuters) - ING Barings said Monday it was revising its 1998 economic forecasts for Brazil following the Brazilian government's announcement of a much-anticipated budget-slashing plan. "ING Barings is hereby revising its 1998 economic projections for that country," the firm's chief economist for the Americas, Arturo Porzecanski, said at a Barings Latin American conference here, in reference to Brazil. He said Barings now projected real GDP growth of not more than two percent, compared to its previous projection of 3.5 percent, and saw 1998 inflation at three percent rather than 4.5 percent. Barings revised its 1998 current account deficit projection to less than $35 billion from around $40 billion previously. Porzecanski said projections for 1997 were unchanged at three percent for real GDP growth, no more than six percent inflation and a current account deficit of around $35 billion. Barings economist Mauro Schneider, addressing the conference by telephone from Brazil, said his overall view of the plan was positive, adding that he thought the Brazilian government had shown "great agility" in announcing the plan now and was demonstrating a willingness to defend the country's currency, the real. He also said the size of the plan, which could produce savings and extra income of $18 billion, was also "significantly above market expectations." "We don't believe all the measures will be implemented," he said. "But even if 60-70 percent of the measures are implemented, this may help the government to generate a large...surplus in 1998, compensating for larger interest payments." He said the Brazilian Congress could still hold up some measures. "The situation is critical but the Brazilian Congress is still the same," he said. Copyright 1997, Reuters News Service

To: Naveen Kumar who wrote (355)	11/10/1997 6:19:00 PM
From: Steve Fancy	Respond to of 22640

No near-term impact seen from Telebras budget cut Reuters, Monday, November 10, 1997 at 16:15 SAO PAULO, Nov 10 (Reuters) - A roughly $735 million (800 million real) cut in Brazilian federal holding Telebras's (NYSE:TBR) 1998 investment budget will not have an immediate impact on the company's line-installation projects or earnings, analysts said. "The budget is still very big. We thought the government would cut it by something like 2.0 billion reais," said Roberto Veirano of local bank Banco Fonte Cindam. Copyright 1997, Reuters News Service

To: Naveen Kumar who wrote (355)	11/10/1997 6:24:00 PM
From: Steve Fancy	Respond to of 22640

Brazil analysts welcome plan, with some caveats Reuters, Monday, November 10, 1997 at 17:14 By John Miller SAO PAULO, Nov 10 (Reuters) - Brazilian analysts mostly applauded the $18 billion budget savings plan unveiled Monday by the government, though they said financial markets would have welcomed more cuts and fewer tax increases. "The whole market was expecting more expenditure reductions than revenue increases, and the way it came out, it was roughly 50-50," said Marcelo Allain, cheif economist at BMC Bank in Brazil. The sweeping cost-savings plan is aimed at restoring faith in Brazil's strong foreign exchange regime by reducing the government's budget deficit, which along with the current account gap make the Brazilian currency vulnerable to speculators, analysts said. Among its features are tax increases on gasoline, beverages, automobiles and layoffs of state workers. While the plan seems to have delivered the tough, belt-tightening measures sought by the market, there was still some uncertainty about its impact over the course of next year. Even the government could not come up with a new primary budget surplus target for 1998. Its former forecast for the primary account, excluding interest payments on government debt, was for a surplus of 1.5 percent of gross domestic product. Brazil's operational budget account, which includes interest payments on the government's whopping 240 billion reais ($218 billion) local debt, is forecast to show a deficit of 3.1 percent of GDP this year. "There is cautious optimisim in the market, which is trying to decipher the plan to see its significant long-term impacts," said Keith Wilson, director of global capital markets for Bank of America in Brazil. "I'd say the market is taking a wait-and-see approach." Analysts said a plan with more budget cuts would have sent a stronger signal about the government's willingness to reduce the state's role in the economy and to rely less on its tax-raising authority to generate income. To be sure, many observers were pleasantly surprised by the scope of the measures, saying they surpassed last week's expectations of a $9 billion to $11 billion savings plan. "We were figuring that this savings would amount to 1.5 percent of GDP, and this corresponds to about 2.5 percent, so that is much higher than expected," BMC's Allain said. Still, he and others said local markets would wait to see how foreign investors react. "We are going to continue experiencing the influence (of outside markets), but with a reaction of this magnitude from the government, in the short term there should be a reduction in expectations of a devaluation," said Carlos Kawall, chief economist at Citibank in Brazil. For Bank of America's Wilson, the reaction by foreign investors is not expected to be exuberant. "Brazil is still exposed to external shocks, and amid the low level of international liquidity, there doesn't seem to be a strong interest in opening up new positions here," Wilson said. E-mail: john.miller@reuters.com Copyright 1997, Reuters News Service

To: Naveen Kumar who wrote (355)	11/10/1997 6:37:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shrs end higher on late buys, fiscal moves Reuters, Monday, November 10, 1997 at 16:46 SAO PAULO, Nov 10 (Reuters) - Brazil shares closed up 1.96 percent in a late buying spree in a positive, but cautious reaction to fiscal measures unveiled by the government to boost confidence in the battered real currency, brokers said. The Bovespa index (INDEX:$BVSP.X) of the 51 most active stocks ended at 9,006 points, up 173 points, in moderate turnover of 544.5 million reais ($495 million). The bolsa traded sharply higher early in the session, rising over four percent, reflecting optimism about the 51 fiscal measures designed to provide savings of about 20 billion reais, or $18 billion to the government. But stocks pared gains during the day before bouncing back at the close as investors lost much of the enthusiasm that marked the beginning of the session, while they digested the budget plan. "Overall the market reacted well, but throughout the day we took a more cautious approach to the budget plan as it is seen taking the economy to a recession," said one trader. The package of measures, announced early on Monday, includes severe cuts in expenditures and efforts to raise revenues, such as income tax increases. Though cautious, traders looked relieved the financial markets had a calm day. Stocks closed up and the real rose 0.12 percent in a day without any Central Bank intervention. Among leading blue-chips, benchmark Telebras (SAO:TEL_.P) preferred rose 2.79 percent to end at 109.99 reais. State oil firm Petrobras (SAO:PET_.P) preferred jumped 4.09 percent, closing at 229 reais after the government said it would raise fuel prices by roughly five percent later this week. Federal power holding Eletrobras (SAO:ELE_P.B) preferred surged 4.12 percent higher, ending at 505 reais. Private mining company Cia Vale do Rio Doce (CVRD) (SAO:VAL_.P) preferred closed up 0.43 percent to 20.80 reais. Copyright 1997, Reuters News Service

To: Naveen Kumar who wrote (355)	11/10/1997 6:48:00 PM
From: Steve Fancy	Read Replies (2) \| Respond to of 22640

So what does everyone think...which way do we go from here? It seems it was the $734 million Telebras budget cut that caused the stock to pull back. Apparently the stock ended up as well as the Bovespa index...apparently in a late day buying spree. I wonder why TBR closed down here? Would any of you TBR experts expect the fiscal changes to offset budget cut concerns? Isn't TBR scheduled to release more info on the privatization this week? Aaron, thanks for answering the question on volatility. sf