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

To: Steve Fancy who wrote (7442)	9/3/1998 6:25:00 PM
From: Steve Fancy	Respond to of 22640

Canada's Martin says Latam on path to reform Reuters, Thursday, September 03, 1998 at 17:17 WASHINGTON, Sept 3 (Reuters) - Canadian Finance Minister Paul Martin said on Thursday that Latin America countries had taken the right steps to put their fiscal houses in order and should not be compared to troubled economies in other parts of the world. "Latin American countries are taking the right steps and have demonstrated a conviction to continue along that path," Martin told a news conference on the sidelines of a meeting of Latin American officials sponsored by the IMF. Martin said Latin American finance ministers expressed concern at the meeting that international investors were lumping them together with other emerging markets that face financial difficulties. "The ministers are right. The comparison is like apples and oranges. There is no reason not to have confidence in the Latin American economies," he said. "We have to distinguish between the situation in Latin America and that in many other parts of the world," he said. Latin American ministers were not concerned about the IMF's ability to fund assistance programs in the region. Rather, their main concern was that the rest of the world "recognize the tremendous effort they have made." He said the meeting was a first step to creating a new global "architecture" that will put greater emphasis on the prevention of financial crises and regional peer reviews of economies. 898-8383, washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7442)	9/3/1998 6:29:00 PM
From: Steve Fancy	Respond to of 22640

Latam finance chiefs urge calm amid market turmoil Reuters, Thursday, September 03, 1998 at 18:12 By Anthony Boadle WASHINGTON, Sept 3 (Reuters) - Latin American finance officials, rattled by a devaluation of the Colombian peso that could spark a currency crisis throughout the region, urged investors on Thursday not to be stampeded by world market turmoil into a blanket sell-off of all emerging markets. As the officials from Latin America's nine main economies began a two-day meeting at the International Monetary Fund, major Latin American stock markets were posting big losses and investors were watching the meeting closely. U.S. Treasury Secretary Robert Rubin said developments in the region were "profoundly important" to the United States. "We have felt from the very beginning...that what happens in Latin America is profoundly important for the United States," Rubin said on the sidelines of the meeting. "For that reason, we have been extremely supportive of the activities and programs in Latin America that deal with the issue." Rubin said many Latin American countries were equipped to deal with the world financial situation. "You have a host of nations in Latin America that have been very forward looking in terms of economic policy and reform. They have accomplished a great deal," he said. Mexican Finance Minister Jose Angel Gurria complained that markets were overreacting to world financial problems and failing to discriminate between emerging economies. "Markets are certainly overreacting and not discriminating at all between countries that have done their homework and are taking care of their fiscal positions, taking care to have a flexible, modern and responsive exchange rate regime," Gurria told reporters as he arrived at the IMF. "Everyone is thrown in the same basket, saying they are all emerging markets." Officials from Venezuela, whose bolivar is seen as especially vulnerable to a knock-on currency effect after Colombia's devaluation on Wednesday, did not speak to reporters before the meeting. Gurria denied that Latin American countries were in Washington to seek IMF funds to ward off financial troubles. "We have not come to ask for money. We have not come here to organize a great fund to support Latin America," he said. "The main purpose of this meeting is to analyze the situation of world markets and the impact it is having on Latin America and to send a clear message to the market that they must differentiate (between economies)," he said. Canada's Finance Minister Paul Martin and Bank of Canada governor Gordon Thiessen were also attending. Chilean Finance Minister Eduardo Aninat touted his country's strengths before entering the meeting, which was closed to the press. "Chile's growth is the highest of all of Latin America. It will be about 5.5 percent this year and 3.8 percent in 1999," he told reporters. He hailed a vote in Chile's Chamber of Deputies on Wednesday approving a gradual reduction in Chile's uniform trade tariff over five years from January 1999. "It's an important sign to the market because in spite of the turmoil in East Asia and Russia it shows that Chile is not passive and that we continue carrying out reforms. "I have average expectations for this meeting," Aninat said. "My expectation is that we can enhance cooperation and have a fluid dialogue." Top finance officials from Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela were attending the meeting. Colombia bowed to pressure on the peso on Wednesday, announcing a de facto devaluation that analysts called the first significant change in any Latin American country's exchange rate policy since Asia's financial crisis last year. Colombia's Finance Minister, Juan Camilo Restrepo, has repeatedly cited the "domino effect" of market turmoil in Asia, uncertainty in Venezuela and the Russian meltdown for the peso's vulnerability. While Venezuela is considered the most vulnerable, investor attention has increasingly focused on Brazil, Latin America's economic powerhouse, whose gross domestic product of $800 billion is nearly twice that of Mexico. Foreign investors pulled money out of Brazil at a frenzied pace in August, causing the the fastest monthly drain in five years and pressuring Brazil's currency, the real. President Fernando Henrique Cardoso, seeking reelection this year, has vowed not to devalue. Economists say a devaluation could plunge the entire region into a recession. Cardoso, speaking in Brasilia on Thursday, said the nation's economic stability depended on the approval of government reform projects already pending in Congress, and that he would not announce a new fiscal package. "Stability depends on the reforms," Cardoso told a news conference. "Brazil has the resources to react to any emergency ... In this moment of turbulence, we have the conditions to advance." Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7442)	9/3/1998 6:54:00 PM
From: Steve Fancy	Respond to of 22640

Brazil says rating agencies treat countries alike Reuters, Thursday, September 03, 1998 at 18:22 BRASILIA, Sept 3 (Reuters) - Ratings agencies are failing to distinguish between countries amid a global crisis in emerging markets linked to Russia's deepening economic woes, a spokesman for Brazilian President Fernando Henrique Cardoso said Thursday. Moody Investors Service's announcement that it was downgrading Brazil's speculative credit rating sent local shares tumbling to two-year lows and put pressure on the domestic currency, the real. "The rating agencies are being cautious, especially in the aftermath of the Asian crisis where they were caught by surprise," the spokesman said. "Unfortunately, they are not differentiating between countries, but are showing mistrust in relation to emerging markets in general." The spokesman added there was no change "whatsoever" in Brazil's foreign exchange policy. Colombia's decision to devalue the peso this week has raised fears the currency crisis could spread across the region. Economists say Brazil's high budget and current account deficits make its currency vulnerable to speculative attack. Brazil announced a set of rules last week to draw dollars into the country and bolster its foreign currency reserves to protect the real, considered overvalued by between 10 percent and 30 percent. But the measures have failed to prevent a large outflow of dollars as investors pull out of stocks to take refuge in safer instruments like U.S. Treasuries. Brazil's currency reserves as measured by the international liquidity concept -- which includes accounts receivable -- totaled $70.21 billion in July. The Central Bank said those reserves fell $3 billion in August, although some economists said actual losses could be twice that. The presidential spokesman denied there was a run on the real, saying local investors were merely investing in Brazilian debt abroad, which fell again Thursday on worries about the Moody's rating. "There is no run on the real," he said. "Brazilian investors, who are realizing that Brazilian paper abroad is cheap, are sending out funds and buying Brazilian paper which has become profitable." joelle.diderich@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7442)	9/3/1998 6:56:00 PM
From: Steve Fancy	Respond to of 22640

INTERVIEW-Brazil denies mulling import barriers Reuters, Thursday, September 03, 1998 at 18:48 By Joelle Diderich BRASILIA, Sept 3 (Reuters) - Brazil is always looking for ways to trim its bloated trade deficit, but putting up barriers against foreign imports is not one of them, according to Foreign Trade Secretary Jose Roberto Mendonca de Barros. "We are certainly in favor of commercial defenses against unfair practices," Mendonca de Barros told Reuters in an interview late Wednesday. "But we are not studying a general elevation of barriers to imports." Brazil has seen its trade balance fall into the red since the introduction in 1994 of a new domestic currency, the real, widely considered overvalued by between 10 percent and 30 percent. While the currency has been credited with toppling triple-digit inflation rates, analysts say it has hurt Brazil's export performance by inflating the cost of locally produced goods. Brazil posted a trade deficit of $666 million in August, bringing the accumulated trade deficit to $3.03 billion in the first eight months of the year, compared with a shortfall of $4.71 billion in the same period last year. The trade balance is one of Brazil's most closely-watched indicators as it is a key contributor to the current account deficit, which economists say makes Brazil vulnerable to an Asian-style speculative attack. The current account gap stood at 3.94 percent of gross domestic product (GDP) in the 12 months to July. But the government sees no need for import barriers, saying the trade gap should end 1998 at $4.5 billion, almost half the $8.4 billion deficit registered in 1997. Instead, it plans to launch a program aimed at doubling exports to $100 billion by 2002, Mendonca de Barros said. The program will designate private sector leaders for the 55 areas which accounted for the bulk of Brazilian exports last year, reporting to government officials in 12 departments who will try to solve their problems, the trade secretary said. One of the priorities of the coordinated effort will be to improve Brazil's trade deficit with the United States. Brazilian exports to the United States have risen 22 percent since 1994, while U.S. exports to Brazil have soared 222 percent during the same period, according to a report by the National Industry Confederation (CNI). Brazil posted a trade deficit of $4.9 billion in 1997 against the United States alone, the CNI said. "We have a small, stagnant participation in the U.S. import market which is very concentrated in some intermediary products," said Mendonca de Barros. "We have to broaden this offer." He said Brazil would continue to argue energetically against U.S. barriers to its imports, which affect products including orange juice, sugar, textiles, shoes, tobacco and shrimp. joelle.diderich@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7442)	9/3/1998 6:59:00 PM
From: Steve Fancy	Respond to of 22640

FOCUS - Colombia boosts jitters about LatAm Reuters, Thursday, September 03, 1998 at 18:42 By Ian Simpson NEW YORK, Sept 3 (Reuters) - Colombia's currency devaluation boosts jitters about Latin American economies, especially that of Venezuela, analysts said Thursday. However, they told Reuters Colombia was too small to have a major impact on other regional economies, outside of investor sentiment. Tuesday's devaluation of the peso was the first major change in any Latin American country's exchange rate policy since the start of the Asian crisis last year. The move fuels questions about whether other Latin American countries, such as Venezuela, Ecuador, and Brazil, might follow Colombia's lead and devalue, causing turmoil in the region. Investors have feared financial upheaval in Latin America for its possible effect on the U.S. economy. The region gets about 20 percent of U.S. exports. David Chon, Latin American strategist at Bear Stearns, said markets worldwide have been jolted for more than a year by tumult in emerging markets from East Asia to Russia. "Whenever a negative event happened in the world the one uniform question is, who's going to be next?" he said. "That is what is going on on the back of the Colombian devaluation." Veronica Berger Collins, senior fund manager at Foreign and Colonial Emerging Markets Ltd. in London, said Colombia's move fed skittishness about Latin America overall, even about economies that are far bigger. "You have a little one (like Colombia) making a mess and it can get someone nervous," she said. "It's the nervousness that can trigger" market upheaval. Colombia bowed to pressure on the peso Tuesday and announced it would let it drop by up to 26.6 percent against the dollar this year. The previous limit was 16 percent. For the 12-month period ending Sept. 2, 1999, Colombia said the peso could slide up to 23.14 percent, nine percentage points more than the previous limit. Analyst said the biggest impact would be on Venezuela, Colombia's second-biggest trading partner and a big oil producer. Venezuela has been seen as likely to devalue its currency, the bolivar, because of low oil prices and political uncertainty ahead of December's presidential elections. "Venezuela will see rippling effects from the devaluation, further deteriorating its already weak weakened trade balance due to lower oil prices," ABN AMRO said in an analysis. "... It will ... add pressure to the inevitable bolivar devaluation near term." Colombia ranks near the bottom of indexes that measure the importance of Latin American markets. For example, a Morgan Stanley Capital International index for Latin America <.CEFL> puts Colombia's weight at 1.79 percent, far below the 39.18 percent weighting for Brazil. The two Colombian American Depositary Receipts that trade publicly in New York were mixed. Banco Ganadero <BGA.ML> (NYSE:BGA) rose 1/8 to 18-1/8, off a 12-month low, and Banco Industrial Colombiano <BIC.NL> (NYSE:CIB) fell 7/16 to 6-7/16, a 12-month low. Copyright 1998, Reuters News Service