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

To: md1derful who wrote (8274)	9/18/1998 11:56:00 AM
From: Steve Fancy	Respond to of 22640

Doc, I don't think we've seen any further word on the listings in over a week. No one even talking about it in the news. As far as I understand last word was listing and trading in Brazil on Monday...US listing end of September, beginning of October. I'm watching for news. I still believe the sum of the parts will be greater than the whole. Thinking of one of those dangerous call positions. Seems Clinton impeachment talk is picking up. Over 100 newspapers now supporting this solution. This, along with this tape could be the downer of next week. We'll probably see some intense selective end-of-quarter windows dressing in the next two weeks also. Gonna be interesting (that word again) as always. sf

To: md1derful who wrote (8274)	9/18/1998 12:13:00 PM
From: Steve Fancy	Respond to of 22640

Doc, although I've looked for short covering many times on Friday, and maybe I've put to much emphasis on the actual split, logic would say the split will at least draw some attention to fundamentals which may support some late day short covering today. Although I'm undecided about the rest of the world, Brazil sounds to be looking up to me. Getting close to elections can't hurt either. sf

To: md1derful who wrote (8274)	9/18/1998 12:15:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Obuchi and Opposition Parties Set Pact to Aid Japanese Banks An INTERACTIVE JOURNAL News Roundup A plan to bolster Japan's troubled banking system was struck in Tokyo on Friday, after days of haggling between ruling and opposition parties. Full details of the package weren't immediately released, but Naoto Kan, head of the opposition Democratic Party, told reporters that Prime Minister Keizo Obuchi had agreed to many terms put forth by the opposition. Mr. Obuchi, who has faced considerable pressure to strike a deal before a meeting planned in the U.S. with President Clinton next week, hailed the agreement as good for the struggling Japanese economy and an important step in resolving Japanese banks' problems with bad loans. "Funds will flow smoothly to companies in need of funding and this will be factor to perk up the economy," Mr. Obuchi said. Asked if the latest plan, a revised blueprint which incorporates a number of proposals offered by the three opposition parties, is better than the government's original plan, he said, "Rather than say 'better,' no matter how good a plan is, we have to pass it into law. Today's agreement was the result of talks with the leaders of all three parties, and I think that's great." Another official of the Democratic Party said Messrs. Kan and Obuchi agreed that bankrupt banks would be dealt with through nationalization as well as other measures, on which he didn't elaborate. He said Long-Term Credit Bank of Japan Ltd. would be put temporarily under state control. The official said Messrs. Kan and Obuchi had agreed to set off the Finance Ministry's power to set policy for the financial industry from its fiscal powers, which it would retain. The necessary laws for this would be passed in the next parliamentary session. An official of the Heiwa-Kaikaku opposition group, which was included in the agreement, said the LDP and the opposition agreed to aim for the split of the Finance Ministry's powers to be carried out by June 1999. Mr. Kan said the agreement covered all three opposition groups which negotiated with the LDP on banking reform: the Democratic Party, Heiwa-Kaikaku and the Liberal Party. But Liberal Party head Ichiro Ozawa expressed dissatisfaction with the deal, saying that while his party would participate in efforts to work out banking legislation, it didn't feel the agreement was an adequate basis for the legislation.

To: md1derful who wrote (8274)	9/18/1998 12:16:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Russia Postpones Its Deadline For $40 Billion Restructuring By BETSY MCKAY Staff Reporter of THE WALL STREET JOURNAL MOSCOW -- Russia has postponed by a week a deadline for a controversial $40 billion debt restructuring, saying it wants to accommodate demands by foreign investors for better terms. Alexander Shokhin, Russia's new deputy prime minister responsible for finance, said the terms of a forced restructuring declared last month could be modified but said investors shouldn't expect a complete reversal of the previous government's de facto default. Likely to get the best terms, however, will be Russian holders of frozen domestic debt. To try to revive Russia's paralyzed banking system, the Central Bank said Thursday it will purchase the treasurys of select Russian institutions at their nominal value. Ruble Weakens Further The buyback will be funded by the emission of new money, a policy shift likely to fuel inflation and further depress the ruble. The Russian Central Bank Thursday set its official exchange rate at 14.6 rubles to the dollar, compared with 12.45. At a U.S. House International Relations Committee hearing Thursday, Clinton administration officials fended off lawmakers' suggestions that the U.S. and the International Monetary Fund cut Russia off from new loans and leave the country to fend for itself in private capital markets. "I don't think that's a realistic prospect at all," said Deputy Treasury Secretary Lawrence H. Summers, who stressed that Russia won't get the second tranche of its IMF package unless it takes profound steps to return to the path of free-market reform. Among the steps he advised the Russians to take: improve tax collection, reduce spending to shrink the budget deficit, strengthen the banking system, and adopt commercial laws so everyone knows the rules of the game. The Russian government is under strong pressure to assist Russia's banks, many of which are now insolvent, having gambled heavily on the now-frozen Russian debt market. Russians hold the bulk of short-term treasurys covered by last month's restructuring. As well as buying back some short-term paper, the Central Bank said it will also lower the reserve requirements for these same institutions. This will reduce the amount of cash they are required to keep with the Central Bank and free up funds for payments. Reform Politically Difficult Analysts criticized the plan, saying Russia needed to close inefficient and insolvent banks rather than issue money to save them. Banking reform is politically difficult because leading Russian banks helped fund President Boris Yeltsin's presidential campaign and have links with other political forces. Robert DeVane, an independent investment consultant in Moscow, said special help for Russian banks would anger foreign investors, who complain they have been discriminated against in the restructuring of government debt. Foreign investors, who hold $11 billion of the defaulted Russian treasurys, aren't covered by the proposed buyback program. Over a dozen Western banks signed a statement Thursday calling on Russia to revise the original restructuring terms to reduce their losses. Mr. Shokhin said a delegation had been appointed to hold talks with Western investors and criticized the handling of Russia's financial crisis by the previous government. Foreign investors say Russia's forced restructuring will shut Russia out of international capital markets for years. The new government has tried to repair some of the damage. Mr. Shokhin, said a deadline originally set for Friday for investors to join an initial restructuring arrangement had been moved to Sept. 25. Foreigners condemned the original terms as confiscatory. Russia's economic direction remains uncertain. Mr. Yeltsin said Thursday that it will take another week for the new prime minsiter, Yevgeny Primakov, to name a full cabinet. --Michael M. Phillips contributed to this article.

To: md1derful who wrote (8274)	9/18/1998 12:19:00 PM
From: Steve Fancy	Respond to of 22640

Chile Widens Peso Trading Band As Market Turmoil Sweeps Globe By CRAIG TORRES Staff Reporter of THE WALL STREET JOURNAL BUENOS AIRES -- Chile eliminated a key control on capital and widened the trading band for its peso in an effort to reduce high volatility in interest rates, as the global financial hurricane moves across Latin America. The elimination late Wednesday of the main capital control, known locally as the encaje, surprised analysts. Chile's controls have often been cited as a model for countries that need to reduce volatility and speculation in their financial markets. The encaje was a mechanism requiring foreign investors, or even local companies borrowing abroad, to keep 10% of foreign-capital inflows on deposit at the central bank. A separate control, which requires foreign investors to keep their money in the country for at least a year, is being kept in place, according to one analyst who spoke with a central-bank official. And analysts noted the encaje could be reimposed sometime in the future. Swept by Broader Tide The controls were developed at a time when Chile was in the limelight and struggling with strong investment inflows that threatened to overvalue its currency. Chile today, for all its history of prudent management, finds itself struggling with capital outflows and pressures to devalue its currency, like every other Latin American nation. The country can no longer afford to discourage investment or raise the cost of finance for its companies through capital controls, analysts said. "Investors are clearly not discriminating between good emerging markets and bad emerging markets," said James Barrineau, Latin American equity strategist for Salomon Smith Barney, who predicted the capital controls would fall this year. "Chile doesn't have the debt problems of Brazil, and has a much better fiscal picture than Brazil; but they are facing the same head winds and need to address them." Thursday, the Chilean peso fell slightly to 467 per dollar, from 464.5 on Wednesday. There was little reaction to the government's moves on the Santiago Stock Exchange, where the IPSA Index of leading shares fell 1.3%, to close at 58.34. Coping With Speculation "It is ironic that when everybody is talking about Chile and their model that Chile itself [is] removing" capital controls, said Gray Newman, senior Latin America economist at Merrill Lynch & Co. If there is any message for emerging economies, analysts said, it is that even capital controls aren't a sufficient defense against volatility and speculation when a country's economic accounts are dangerously out of balance. Chile has suffered from constant speculation and hedge selling of the peso this summer, as banks and corporations have bet the currency will have to move lower to correct trade imbalances. Steep price declines in Chile's key export commodities -- such as copper -- and persistent consumption of imports have now pushed the country's projected 1998 current-account deficit to more than 7% of gross domestic product, compared with 5.3% of GDP in 1997. In recent weeks, overnight interbank lending rates have risen as high as 50%, as the central bank starved the system of pesos in an effort to support the currency. "The cost of stopping speculation against the central bank has been very high," said Henry Rudnick, head of research at CB Capitales SA, a Santiago finance firm. "The levels of interest-rate volatility in Chile were equal to Russia." Central Bank's Actions The central bank may have aggravated the problem with a series of policy changes in June. At that time, the tax on foreign investment was reduced to 10% from 30% annually; but the central bank tightened the trading band around the peso. In an interview after those moves, Carlos Massad, head of Chile's central bank, said that a rapid slide in the peso would be unacceptable. Any gains in export competitiveness would be immediately lost to increased inflation. In an effort to absorb demand for dollars, the central bank created a dollar-indexed note in June, although these instruments apparently haven't satisfied all the demand. After the government lowered what is effectively a tax on capital inflows this week, the peso should now find some support from fresh investment. Interest rates should also subside now that the peso's trading band has been widened to 5%, from 3.5% previously. A central-bank communique was ambiguous about whether investments must remain in the country for one year. Analysts speaking with central-bank officials said the restriction is still in place. The central bank's bulletin said the bank's reference rate has been raised to 14% from 8.5%, a basic acknowledgment of market conditions. Analysts say that it is unclear whether Chile has hit the right policy mix this time. Meanwhile, they warn that conditions will be rough for Chile simply because Latin America is out of favor. Chile may be more attractive today, "but foreign investors aren't going to jump" into the market right away, said Ronald Ratcliffe, chief Latin America economist for Societe Generale Securities Corp. "Investors have taken losses all over the world."

To: md1derful who wrote (8274)	9/18/1998 12:21:00 PM
From: Steve Fancy	Respond to of 22640

Brazil forex mkts seen losing more dollars Friday Reuters, Friday, September 18, 1998 at 11:31 SAO PAULO, Sept 18 (Reuters) - Brazil was posting more losses in its foreign exchange markets Friday, traders said. "The inflows we were expecting came in yesterday, so what we're seeing today are more outflows," one trader said. Traders said it was too soon to forecast how much money could leave the market Friday. On Thursday, a net $207 million left as a $400 million inflow offset capital flight. Belgium's Tractebel SA (BRU:TREB.T) was bringing the money in to pay for its purchase of utility Gerasul (SAO:GRSU6) earlier in the week. Dollar outflows from Brazil have slowed to well under $1 billion a day this week after the government hiked interest rates up to almost 50 percent late last Thursday. Until then dollars were escaping at an average $1.5 billion a day as investors yanked their money out of emerging markets. As of Thursday some $14.765 billion had left through Brazil's forex markets so far in September. The strong outflows were draining reserves and putting pressure on the government to devalue its currency. Copyright 1998, Reuters News Service

To: md1derful who wrote (8274)	9/18/1998 12:23:00 PM
From: Steve Fancy	Respond to of 22640

***!!!Brazil may change Congress rules to speed reform Reuters, Friday, September 18, 1998 at 11:40 BRASILIA, Sept 18 (Reuters) - Brazil's Congress may change parliamentary rules to speed approval of a long-awaited bill to overhaul the tax system and help the government in its battle against an economic crisis, an official said Friday. A spokeswoman for Chamber of Deputies president, Michel Temer, also said the lower House would vote on three final amendments to a pension reform bill on or around October 27. Temer and Senate President Antonio Carlos Magalhaes met with President Fernando Henrique Cardoso on Friday morning to discuss ways to revive the government's structural reform of the 1988 constitution as soon as possible after the Oct. 4 elections. "Should it be needed, (Temer) is in favor of making changes to the procedure," the spokeswoman said. "It would be basically changes to the time periods for the tax reform." Congressional rules spell out fixed time requirements for each stage of the complex process of approving constitutional reform and those periods could be shortened, she said. Copyright 1998, Reuters News Service

To: md1derful who wrote (8274)	9/18/1998 12:27:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Senate president admits calling for extraordinay session Sao Paulo, 18 - The Senate president, Ant“nio Carlos Magalhaes, known as ACM, admitted he could call for an extraordinary session in order to conclude the main reforms before the end of president Fernando Henrique Cardoso's current term. According to him, legislators have been already mobilized to take part in a voting effort right after the elections. "We are interested in approving the reforms that are key to the economic life of the country," the Senate president said. "We need to form a strong political group to concluded the reforms yet this year," the president of the Chamber of Deputies, Michel Temer said. (By Nelson Breve) =============================

To: md1derful who wrote (8274)	9/18/1998 12:27:00 PM
From: Steve Fancy	Read Replies (2) \| Respond to of 22640

Gov't announces additional spending cut of R$ 2bn - rpt Bras¡lia, 18 - The Brazilian government decided to add R$ 2.1bn to the budget cuts announced last week of R$ 4.4bn, increasing it to R$ 6.5bn. The new cuts will be possible through a 30% reduction in federally-owned companies'investment plans totaling R$ 3bn, in addition to a R$ 600m cut in the volume of federally-owned banks' loans to states and municipalites, as well as the payment of Petrobras's arrears amounting to R$ 500m owed to the National Treasury. (O Estado de S. Paulo/ Jornal da Tarde/ Folha de Sao Paulo/ O Globo/ Correio Braziliense)