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

To: Steve Fancy who wrote (7339)	9/1/1998 3:59:00 PM
From: djane	Respond to of 22640

Won't Brazil/TBR benefit as Hong Kong, Malaysia and Taiwan implement policies to restrict the freedom of their currency/stock markets? I believe emerging market fund managers would then have to increase their allocation to Latin/South America. The smaller Asian countries have suffered over the last year as Japan (main lender) has remained mired in a recession. But, South/Latin America are closely linked to the US and Europe and should rebound nicely this fall.

To: Steve Fancy who wrote (7339)	9/1/1998 5:18:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Aug Trade Deficit $666 Mln Vs $361 Mln In July Dow Jones Newswires BRASILIA -- Brazil's monthly trade deficit widened to $666 million in August from $361 million in July and from $253 million in August 1997, the Ministry of Trade and Industry said Tuesday. Exports in August totaled $3.986 billion, while imports were $4.652 billion. The cumulative deficit at end-August was $3.03 billion, narrower than the $4.72 billion registered in the first eight months of 1997. The ministry didn't provide any explanation for the trade figures, which are preliminary and might be adjusted within the next few weeks. Government officials last week indicated that a work slowdown by customs inspectors since early August had stunted both exports and imports. The inspectors returned to normal activity for this week while negotiating their pay demands with the government.

To: Steve Fancy who wrote (7339)	9/1/1998 5:20:00 PM
From: Steve Fancy	Respond to of 22640

UN's ECLAC Sees 1998 Latin American GDP Growth Of 3% Dow Jones Newswires SANTIAGO -- The Economic Commission for Latin America and the Caribbean (ECLAC), a United Nations agency, issued a report Tuesday projecting that the region's combined economies will grow at approximately a 3% rate in 1998, down from 5.3% in 1997. On a per capita basis, GDP growth this year will be around 1%, ECLAC said, compared with a 3.6% rise a year earlier. The UN agency attributed the sharp decline in economic growth from last year to the decline in capital inflows provoked by the Asian financial crisis. As economic activity began tailing off and current account deficits started to rise during October of last year, regional governments found themselves forced to tighten fiscal and monetary policy. Especially hard hit, ECLAC said, were the trade balances of major Latin American exporters of petroleum and copper. ECLAC projects Brazilian economic growth of around 1.5% for the current year, roughly half the level achieved during 1997. Mexico's economy is expected to expand by slightly over 4% during 1998, down from around 7.3% a year earlier. ECLAC sees Argentina's economy outpacing most of the rest of the region during the current year, with expected growth of slightly over 5%, down from the almost 8.5% increase seen during 1997. Latin American percentage growth and inflation rates: GDP Inflation 1997(1) 1998(2) 1997(1) 1998(2) Argentina 8.4 5.2 0.3 1.2 Bolivia 4.2 4.0 6.7 7.9 Brazil 3.0 1.5 4.3 4.6 Chile 6.9 5.0 6.0 5.4 Colombia 3.2 3.0 17.7 20.7 Costa Rica 3.1 4.8 11.2 10.8 Dominican Republic 7.4 8.0 8.4 4.5 Ecuador 3.7 0.8 30.6 35.9 El Salvador 4.1 4.5 1.9 3.2 Guatemala 4.0 4.5 7.1 7.4 Honduras 4.4 4.5 12.7 14.2 Mexico 7.3 4.2 15.7 15.3 Nicaragua 5.5 4.5 7.3 11.2 Panama 4.3 4.5 -0.5 0.3 Paraguay 2.6 3.0 6.2 11.6 Peru 7.7 2.8 6.5 7.7 Uruguay 5.1 3.0 15.2 10.2 Venezuela 5.6 1.0 37.6 39.1 Region 5.3 3.0 10.4 10.9 (1) preliminary (2) projected The 1998 rates are for the 12 month period ending June 30, 1998. (An item that ran around 2020 GMT contained a chart showing country by country inflation rates for the full year 1998. The 1998 rates are actually for the 12 month period ending June 30, 1998.)

To: Steve Fancy who wrote (7339)	9/1/1998 5:21:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil's Telesp, Petrobras Vie To Become Stock Benchmark By GERALDO SAMOR Dow Jones Newswires RIO DE JANEIRO -- For investors wanting a taste of the Brazilian equity market, brokers have long had one name on the tip of their tongues: Telebras. The telecommunications holding is such a strong center of liquidity that at times it looks more like a black hole, dragging into it 60% of the trading volume on the Sao Paulo Stock Exchange. But now that Telebras is privatized and its shares are about to be split in 12, market participants are scrambling to find out which stock will inherit all that liquidity. In other words: how do you play Brazil from now on? Some say there's nothing better to replace a telecom icon than another telecom stock and point to Telesp Participacoes SA, a Telebras spinoff, as its natural successor. Others argue that the market's next liquidity move will be more like an oil gush, as Brazil's state-run petroleum company Petroleo Brasileiro SA, known as Petrobras (E.PTB), draws more attention as the sector opens to private competition. At least one, somewhat nostalgic, consensus emerges from a poll of market observers. "There will never be anything quite like Telebras, a paper with such high liquidity that you could buy at minimum spreads and build large positions on," said Alexandre Schwartsman, head of research at Credit Agricole Indosuez in Sao Paulo. "If you want to make plays in Brazil from now on, you'll have to use other instruments." Telesp Participacoes is the company that owns a controlling stake in Telecomunicacoes de Sao Paulo SA, known as Telesp (E.TSP). Shares of Telesp Participacoes - as well as of the other 11 Telebras spinoffs - are waiting for clearance from the U.S. Securities & Exchange Commission to begin trading. In its favor, Telesp Participacoes has size. The company, which was bought by a consortium led by Spain's Telefonica SA (TEF), represents about a fifth of the old Telebras system. Considering that Telebras trades a daily average of $325 million, Telesp Participacoes would have a projected turnover of $65 million per day, said Schwartsman. By comparison, Petrobras has traded $38 million per session over the last year. Moreover, Telesp Participacoes' free float will equal 80% of total capital. Petrobras has 37.9% of its capital on free float, but a lot of that float isn't quite "free" as large institutional investors maintain the shares in their long-term portfolios, without much rotation. Still, the oil giant has its fans. Ten out of ten major investment banks have "buy" recommendations on Petrobras. "Petrobras has more liquidity - and charm - than Telesp, and it has good things happening in its future, such as partnerships, receiving what the government owes it, and eventually it will be privatized," said Gilberto Zalfa, head of equities at Agenda Corretora. "It (the benchmark) could be either one, but I'm betting on Petrobras." The truth lies somewhere in the middle, as both stocks stand to gain from the disappearance of Telebras, several analysts said. Another rare market consensus is that liquidity will be determined by a strong options market. "When you have an active options market, the cash market becomes more liquid because you allow more investor strategies," said Ricardo Nogueira, an official with the Rio de Janeiro Stock Exchange. Despite its negligible, 5% share of Brazil's equity trading volume, the Rio de Janeiro exchange has a 15-year tradition in Petrobras options. The exchange recently had 16 series on Petrobras call options, compared to six on Telecomunicacoes de Sao Paulo SA. "In the beginning, (the liquid one) will be Telesp, because everyone who holds Telebras will hold Telesp," Nogueira said. "Then it's going to depend on investors, on whether they sell the other 11 spinoffs to buy more Telesp or sell Telesp to get into the cellular companies." At the center of that choice is the market's discussion as to which segment of the telecommunications industry - fixed-line companies or cellular-phone providers - will be most profitable over the long run. -By Geraldo Samor; 55-21-580-9394; gsamor@ap.org