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

To: Steve Fancy who wrote (6996)	8/21/1998 3:17:00 PM
From: Steve Fancy	Respond to of 22640

RESEARCH ALERT - Merrill Lynch cuts Latam banks Reuters, Friday, August 21, 1998 at 15:02 NEW YORK, Aug 21 (Reuters) - Merrill Lynch analyst Rodrigo Quintanilla has downgraded the Latin American banking sector, citing deteriorating macroeconomic indicators, the brokerage said Friday. "Our outlook for the banking sector in Latin America has turned more negative in light of the probable deterioration in macroeconomic indicators as well as continued weakness in global capital markets," Quintanilla said in a report. He also cited "more pessimism toward emerging markets," adding, "Trading multiples are bound to decline sharply in the intermediate term." The analyst cut his ratings on banking stocks in Argentina, Brazil, Chile, Colombia, and Mexico. He said the banks face higher interest rates, potential currency weakness, slowing loan growth opportunities, and a potential drop in the value of their fixed-income and equity portfolios. Quintanilla said he was "not concerned at this point about the solvency of the financial institutions in our coverage, as most are fundamentally sound, enjoy solid franchises in their home markets, and have been historically well-managed." MEXICO Grupo Financiero Banamex Accival SA de CV (Banacci) (MEX:BAV.A) was cut to near- and long-term neutral from accumulate; Grupo Financiero Bancomer (MEX:GFB.B) was cut to long-term neutral from accumulate; Grupo Financiero Banorte SA de CV (MEX:GFN.B) was cut to near-term neutral from accumulate; Grupo Financiero Serfin SA de CV (MEX:GSR.B) was cut to near-term reduce from neutral and to long-term neutral from accumulate. ARGENTINA Banco Rio de la Plata SA (NYSE:BRS) was cut to near-term neutral from accumulate; Banco de Galicia y Buenos Aires SA (NASDAQ:BGALY) was cut to long-term accumulate from buy. BRAZIL Banco Itau SA (SAO:ITA) was cut to long-term accumulate from buy; Unibanco was cut to near-term neutral from accumulate and to long-term accumulate from buy. CHILE Banco Santander-Chile (SAN:STD) was cut to long-term neutral from accumulate. COLOMBIA BanColombia SA <BIC.ML> was cut to long-term neutral from accumulate. 212-859-1610)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (6996)	8/21/1998 3:18:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil capable of fending off mkt jitters--cenbank Reuters, Friday, August 21, 1998 at 15:11 By Carlos Dias SAO PAULO, Aug 21 (Reuters) - Brazil's $70 billion in foreign reserves puts the country in a comfortable position to fend off growing unrest in world financial markets, a senior central bank official said Friday. "We have enough 'ante' to withstand turbulence (in the financial markets) abroad," Maria do Socorro, head of the Brazil central bank foreign reserve department, told Reuters in a telephone interview.

To: Steve Fancy who wrote (6996)	8/21/1998 3:23:00 PM
From: Steve Fancy	Respond to of 22640

"Crisis hit the Latin market shores", Bear Stearns says Sao Paulo, 21 - "Latin American markets are now in a state of free-fall," investment bank and securities brokerage house, Bear Stearns, report says. According to the report, the Latin equity market fall of 5.4% today brings the decline "during the past 24 trading sessions to 27%, the year-to-date decline to 35%, and the 12-month decline to 40%." The institution stresses that the last time Latin equities traded at current price levels was back on December 19, 1995. "The year-long current crisis in emerging markets has now hit the Latin American shores again," affirms categorically David Chon, Bear Stearns' report author. "The Venezuelan market is trading as if a devaluation has already taken place," he writes, "and the rest of the Latin markets are trading as if they are next in line." Brazil Chon affirms that there has been some deterioration in some of the risk measures in Latin America recently, among them, he points out "the widening of the real future contracts". For him, the spread between the December and October real future contracts has widened out to 3.3% in recent days, far too risky, in comparison to a 2.4% average so far in 1998. For him, a narrowing trend would indicate that the sentiment and pressure on the exchange rate is easing. "We are not seeing this yet," he writes. Although other problems facing Latin America, such as large debt burdens as well as dependence on commodities are just as worrisome, "monetary policies inconsistent with the stated exchange rate policy" is the key factor that should be more closely watched. "In other words, if a stable exchange rate is the policy objective, countries such as Venezuela and Brazil need to show that they will let the market set interest rates and work to reduce high fiscal deficits." As investors are adopting a "sell first and ask questions later" mentality, Bear Stearn report states, it is now up to Latin American governments to do something to protect their backyard and avoid speculation. "It is now the Latin market's turn to be tested," the report concludes. Latin America December 1995 August 1998 US$ GDP US$1.5bn US$1.9bn CPI Inflation 25% 8%% Capitalization US$303bn US$303bn Trailing 12-month Earnings US$17.9bn US$35.4bn Forward 12-month Earnings US$24.4bn US$41.9bn (By Paulo Monteiro)

To: Steve Fancy who wrote (6996)	8/21/1998 3:26:00 PM
From: Steve Fancy	Respond to of 22640

Tax burden to remain high for one decade - A study of Planning Ministry economic survey institute (Ipea) shows that the volume of taxes and contributions in Brazil reached 28.9% of GDP in 1996. The proportion is above that of other eight Latin American countries included in the survey. In Argentina, for instance, the tax burden is at 15% of GDP. Ipea estimates that the Brazilian tax burden should reach 30% to 34% of GDP in the next ten years so as to meet the government's expenditures needs. (Folha de S.Paulo) MICT to re-evaluate tax benefit for imports - The Industry, Commerce and Tourism Ministry (MICT) will re-evaluate the inclusion of 149 machines and equipment in the list of 166 items benefited by the so-called "ex-tarif rio" system, which enables the reduction of the Import Tax (II). The re-evaluation will be carried out as requested by Abimaq (Brazilian Association of Machinery Industry), which alleges that those items are produced in the country. (O Estado de S. Paulo) Imec at 0.08% in 4-week period ended on Aug. 7 - The Economic Activity Index (Imec-Fipe/Estadao) closed out at 0.08% in the four-week period ended August 7. The positive result interrupts a series of accumulated negative results in the previous nine weeks. In the four-week period ended on July 31, the Imec stood at a negative 1.93%. (O Estado de S. Paulo) Merger creates the biggest Brazilian bicycle maker - Sundown, Magna and CR reached a merger accord, creating the biggest Brazilian bicycle maker, with 33% of the domestic market. Sundown Magna CR Associadas S.A., created with an initial capital of R$31m, should reach a projected turnover of some R$160m to R$180m this year. "Next year, we want 2 or 3 percentage points more of the market," the new company president, Jos‚ Radomysler, estimated. (O Estado de S. Paulo/ Jornal da Tarde) (By Sergio Caldas)