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

To: djane who wrote (7214)	8/27/1998 8:51:00 PM
From: MGV	Read Replies (1) \| Respond to of 22640

Brazil to cut to zero foreigners' fixed-income tax This measure obviously could be expected to bolster even further the relative attractiveness of EM debt vs. equity securities that Jeremy noted. At the same time, to the extent it attracts foreign investment to Brazil, it means that there will be less pressure on rates. Additionally it has a further positive impact on rates; investors will require lower rates because of the benevolent fiscal policy this measure embodies. It is the same concept as a municipal bond. Tax free rates are lower than taxable bond rates. I think Cardoso knows what he is doing. He is earning more confidence. This is good! One further thought. We probably should expect a jingoistic/xenophobic attack by the left on Cardoso for doing this. It just happens to be the right thing to do for Brazil and Brazilians. Never mind that it has positive benefits to foreign investors. If the left attacks the measure, it would be a simplistic example of arguing to cut off your nose to spite your face! Lets wait and watch this one.