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

To: Steve Fancy who wrote (8472)	9/24/1998 12:33:00 AM
From: Steve Fancy	Respond to of 22640

Brazil shares cheer Greenspan, close 10.98 pct up Reuters, Wednesday, September 23, 1998 at 17:29 SAO PAULO, Sept 23 (Reuters) - Brazilian shares ended close to their day's highs, with the key Bovespa index (INDEX:$BVSP.X) up 10.98 percent, as buying was spurred by U.S. Federal Reserve Chairman Alan Greenspan's hints that he may be considering a monetary easing. The Bovespa ended 721 points higher at 7,280. Some major blue-chips such as Eletrobras preferred (SAO:ELET6) surged 22.41 percent at the close. "Greenspan's news dominated today. Speculation that there may be a rate cut in the future, although not immediately, was proved and that encouraged buyers," said a local fund manager. Greenspan said global financial turmoil would be more than enough to curb U.S. inflation, the strongest indication yet he may be considering an interest rate cut. Brazilian markets would benefit from monetary easing in the United States, because that may encourage investors to return to emerging market equities, which offer higher returns, brokers said. Other blue chips also rose. Petrobras preferred (SAO:PETR4) surged 15.97 percent to 138 reais, while Vale do Rio Doce (SAO:VALE5) gained 7.78 percent to 19.40 reais. Telesp Celular (SAO:TSPP4) and Tele Sudeste (SAO:TSEP4), which started trading this week, rose 15.71 percent and 17.43 percent respectively. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8472)	9/24/1998 12:35:00 AM
From: Steve Fancy	Respond to of 22640

Emerging debt rallies on Greenspan's comments Reuters, Wednesday, September 23, 1998 at 17:46 NEW YORK, Sept 23 (Reuters) - Emerging debt prices rose Wednesday after comments by U.S. Federal Reserve Chairman Alan Greenspan revived hopes for an interest rate cut, which would increase dollar flow to financially ailing Latin America, analysts said. "We saw a big upturn in the market right after the speech," said Javier Murcio, director of Latin American economics at Credit Suisse First Boston. Greenspan told the Senate Budget Committee that global financial turmoil would be more than enough to curb U.S. inflation, the strongest indication yet he may be considering an interest rate cut. U.S. interest rates are the basis against which emerging market risk is calculated. Therefore, lower U.S. interest rates would result in cheaper access to credit for emerging countries. "Lower rates would also prevent a major economic slowdown in the U.S.," Murcio said. "This is important to emerging market economies, because exports to the U.S. are a major part of their economic activity." Benchmark Brazil C bonds <BRAZILC=RR> were up 3-1/4 to bid 65, Argentina PAR bonds <ARGPAR=RR> were 3-3/4 to bid 70-1/4 and Mexico PAR bonds <MEXPAR=RR> were up 3-3/4 to bid 77-1/8. Analysts said emerging bond investors took heart in comments from Brazilian President Fernando Henrique Cardoso that indicated willingness to ask the International Monetary Fund (IMF) for help in warding off the economic contagion that began with last year's devaluation of the Thai baht and was exacerbated by last month's Russian debt default. "We are not afraid...to have intensive talks with partners and international institutions like the Monetary Fund, the World Bank and the Inter-American Development Bank," Cardoso said in a speech in Brasilia. Brazil's nominal budget deficit has ballooned to almost 8 percent of gross domestic product, making it the biggest headache facing Cardoso after Oct. 4 elections, which he is expected to win in a first round of voting. "If an understanding with these institutions were in the interest of the country we would do it," Cardoso said. He promoted the creation of "a kind of contingency fund that would be used to prevent crises." "This is significant in that it was the first time Cardoso openly expressed the possibility that he will go to multilateral lenders for a program if it becomes necessary," said Siobhan Manning, Latin American analyst at PaineWebber. Emerging bonds also benefited from soaring equity prices Wednesday, which were touched off by Greenspan's comments. Based on early and unofficial data, the Dow Jones industrial average ended up 257.21 points, or 3.26 percent, at 8,154.41. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8472)	9/24/1998 12:37:00 AM
From: Steve Fancy	Respond to of 22640

Brazil economy feels recessionary effect of crisis Reuters, Wednesday, September 23, 1998 at 18:08 RIO DE JANEIRO, Sept 23 (Reuters) - Brazil's economy is starting to feel the recessionary effects of the government's response to a crisis in international financial markets, the National Industry Federation (CNI) said Wednesday. The CNI said consumer prices, which showed an unprecedented deflation for both July and August, could fall again in the upcoming months due to a slowdown in economic activity. "With this, annual inflation could again be surprising with the intensity of the drop," the CNI said. "The intensity of the drop shows in an explicit way the recessive framework imposed by the economic policies (taken by the government) in response to the international crisis," it added. The industry federation said inflation, as measured by Fipe's IPC index, could close the year near zero because of the government's move to hike interest rates to nearly 50 percent earlier this month to stem massive dollar outflows. Consumer prices in Brazil, as measured by the Economic Research Institute (Fipe), dropped 1.0 percent in August against a decline of 0.77 percent in July. Fipe predicted at the time the data was released on September 3 that inflation would end the year at 1.0 percent, the lowest level since the institute started compiling figures in 1939. The Fipe said prices should start rising again in October after seasonal slumps, but the CNI said the "surprising" rate of deflation had outstripped seasonal factors. "The occurence of negative (inflation) rates does not seem to be strictly associated to seasonal movements," the CNI said in an economic report. "The slowdown in economic activity seems to be an additional decisive factor in the recent behavior of the inflation indices." tracey.ober@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8472)	9/24/1998 12:38:00 AM
From: Steve Fancy	Respond to of 22640

Latam stocks soar, cheer Greenspan comments Reuters, Wednesday, September 23, 1998 at 18:36 By Martin Roberts MEXICO CITY, Sept 23 (Reuters) - Buyers poured into Latin American stocks on Wednesday and hurled them sharply higher amid hopes that comments by U.S. Fed Chairman Alan Greenspan presaged cuts in U.S. interest rates. Greenspan's call for the Fed to tackle world economic turmoil in testimony to a U.S. Senate panel added to growing hopes of international aid to Latin America that have hauled the region back from crisis levels reached two weeks ago. "I do think that we have to bring the existing instability to a level of stability reasonably shortly to prevent the contagion from really spilling over and creating some very significant kinds of problems for all of us," Greenspan told the Senate Budget Committee. As soon as Greenspan spoke, brokers from Mexico City to Buenos Aires bought stocks in anticipation of lower business costs and a possible reverse in capital flight that lower U.S. rates would bring. "Greenspan's news dominated today. Speculation that there may be a rate cut in the future, although not immediately, was proved and that encouraged buyers," said a fund manager in Brazil. Brazil's leading Bovespa (INDEX:$BVSP.X) index of leading shares traded in Sao Paulo leaped 10.98 percent to 7280. Mexican stocks got off to a flying start after local interest rates jumped down from three-year highs and kept climbing as dealers saw hints of easing U.S. monetary policy in Greenspan's testimony. "The markets showed their expectations of U.S. rate cuts, but that possibility is still not clear," said Roberto Galvan, analyst at the Bursametrica consultancy in Mexico City. The 35-share IPC index <.MXX> soared 9.08 percent to 3902.19 points. Local dealers said a welter of buy orders boosted volume and turnover on the bourse to levels rarely seen during what has been a thin year. Argentine stocks shared the optimism of their neighbors over Greenspan's comments, driving the leading Merval <.MERV> to a rise of 8.23 percent to 399.13 points. Buenos Aires traders said their market also took its lead from Brazil. "We're always dependent on the Brazilian bourse. It's our reference," trader Diego Montenegro at Republica Valores brokerage said. Chilean stocks mimicked sharp rises elsewhere in Latin America, and the leading IPSA <.IPSA> stock index ended 8.61 percent higher at 65.76 points. Venezuela's 15-share IBC index <.IBC> likewise climbed 7.66 percent to 239.64 points on hopes the U.S. Fed would help kick-start a global recovery. Latin stocks have recovered substantially from two-year lows reached this month amid fears that capital flight from Brazil heralded a devaluation of the real currency and a rerun of the regionwide 1994-95 tequila crisis. But they are still down substantially for the year to date, battered by fallout from beleaguered Asian and Russian markets. Argentine stocks are down about 42 percent for the year and Brazil 33 percent, while Mexico has shed some 40 percent in dollar-adjusted terms. mexicocity.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8472)	9/24/1998 12:39:00 AM
From: Steve Fancy	Respond to of 22640

Latin anger but not surprise at corruption rating Reuters, Wednesday, September 23, 1998 at 18:53 By Jason Webb BUENOS AIRES, Sept 23 (Reuters) - Latin Americans reacted on Wednesday with a mixture of shame, resignation and anger but not surprise to an international survey that rated their region as one of the most corrupt on Earth. Only Latin America's perennial wonder economy, Chile, emerged with much credit from the 1998 Corruptions Perceptions Index released on Tuesday by German-based watchdog Transparency International. Chile was ranked 20th out of 85 countries surveyed, ahead of rich nations like France, Japan and Belgium. But neighboring Argentina -- with Latin America's wealthiest population -- came 61st, way behind behind countries with similar income per capita like Greece and South Korea. Paraguay, where it is considered normal to own a car was stolen in Brazil or Argentina, came second to last behind Cameroon in West Africa. Paraguayan businessmen and politicians gloomily admitted that Transparency International was right to rank them 84th, and said the country's permanent political chaos was to blame. "I think the rating is correct. It is painful but we have to accept it," said Nestor Mendez Nunez, president of the Paraguayan Industrial Union business lobby group. "It is very sad, lamentable, undignified to be a country of drug traffickers and pirates," said opposition Sen. Diego Abente. Venezuelans, whose country was rated the eighth most corrupt along with Ecuador, were equally unsurprised. "This is a country with high levels of corruption. You can't deny it. It is a shame but that's the way it is," said Teodoro Petkoff, economic planning minister. In Argentina, President Carlos Menem was indignant at his country's low ranking and appeared to suggest it was politically motivated. "This a subjective and partial study which is aimed at feeding the political opposition's campaign against the government and renew their attacks on the integrity and credibility," Menem said in a news release. Menem's government has been regularly spattered by scandal. Labor Minister Erman Gonzalez continues on the job despite being an official suspect in a probe into illegal arms sales and several senior former officials have been charged over suspected bribes paid by U.S. computer giant IBM Corp. to secure a $250 million state contract. Apart from Chile, which was rated 6.8 points out of a possible 10 for maximum probity, the only Latin American nation to manage more than the 5.5 points beneath which countries are considered very corrupt was Costa Rica. Mexico scraped together just 3.3 points in the survey based on the perceptions of investors, risk analysts and the public and was tied in 55th place with Ghana, the Philippines and Senegal. Latin America's largest economy, Brazil, did a little better with 4.0 points in 46th place. Officials in Mexico, which has been rocked by high-level corruption and political assassinations in the 1990s, were not available for comment on the survey. The Chileans congratulated themselves on their good showing. "To me it seems satisfactory that Chile should appear as the least corrupt country in Latin America," Economy Minister Jorge Leiva told Reuters. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8472)	9/24/1998 12:42:00 AM
From: Steve Fancy	Respond to of 22640

IMF,Brazil intensify talks to speed cash if needed Reuters, Wednesday, September 23, 1998 at 19:21 WASHINGTON, Sept 23 (Reuters) - The International Monetary Fund said on Wednesday it had intensified its dialogue with Brazil so that financial help could be arranged quickly if Brazil needed the cash to resolve its economic problems. IMF Managing Director Michel Camdessus, praising Brazilian promises to reform the tax system and introduce a framework to balance the budget in the medium term, said the IMF would be ready to provide financing to back a "strong and credible Brazilian program." "In recent weeks, the authorities have intensified their open and constructive dialogue with the IMF, with a view to ensuring that adequate financial support could be quickly arranged, if needed," Camdessus said. "For its part, the IMF will not spare any effort to reach with the Brazilian authorities the understanding mentioned by President (Fernando Henrique) Cardoso. In such a framework, the IMF would be ready to provide appropriate financing to support a strong and credible Brazilian program." Brazil has already raised interest rates sharply to defend its currency, the real, and announced plans to cut spending. "Brazil's success in this effort is very important not only for the Brazilian people, but also for its partners in Latin America and for the international community at large," Camdessus added. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8472)	9/24/1998 12:44:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's phone revolution seen slowed by crisis Reuters, Wednesday, September 23, 1998 at 19:23 By Shasta Darlington SAO PAULO, Sept 23 (Reuters) - The crisis battering Brazilian markets could also pull the plug on a telephone revolution that was expected to eliminate Brazil's two-year waiting lists for new lines and improve notoriously poor service. Two months after Brazil took in about $19 billion for the 12 phone companies carved out of former monopoly Telebras (SAO:TELB4) in Latin America's biggest privatization auction, those government-set goals are looking more than ambitious. "A lot has changed between then and today," said Zain Manekia, an analyst at Warburg Dillon Read. "There will have to be some renegotiations of these very stringent mandates." Manekia said he could see the new owners of the Telebras units investing on average 15 to 20 percent less than initially announced. Anatel, the telecommunications watchdog agency, denied it is considering changing any of its requirements. "We are in no way discussing that possibility now," a spokesman said. The government requires new companies to almost double the number of phone lines in Brazil to 33 million by 2001 from a current 17 million lines. Analysts like Manekia said that concessions could be made, however. The biggest changes would be for fixed line companies that could cut new line growth to about 7 percent a year, instead of the forecasted 18 percent a year, Manekia said. Which would mean that reductions of Brazil's staggering waiting lists, which reached 6.7 million in Sao Paulo alone prior to the Telebras sale, and sorely-needed service improvements could take longer than planned. "Someone who expects that their phone calls in Rio de Janeiro will now go through on the first try will probably be sorely disappointed," said one analyst who asked not to be named. A nosedive in markets which shaved almost half the value off Telebras stock, before it was replaced by shares in the 12 privatized companies earlier this week, and a possible economic recession could also have negative effects on demand and performance in the industry, analysts said. The new owners, especially the groups that don't include international heavyweights with easy access to loans, could see financing dry up in the short term, making it more difficult to invest in expansions and upgrades. The financial turbulence could also get in the way of government plans to sell licenses to operate "mirror" fixed-line and long-distance companies, which would take the pressure off new owners to invest to prepare for competition. "The crisis will affect the availability of funds to invest in telecommunications in a more aggressive way," said Renato Guerreiro, president of watchdog agency Anatel, referring to the "mirror" companies. Still, firms like Spain's Telefonica de Espana SA (MADRID:TEF) say they plan to meet investment requirements on schedule despite the crisis. "Our investments are medium and long term, so they won't be affected in any way," said a source at Telefonica's Brazil offices. "Our goal is to meet all of the requirements set forth by the Brazilian government." And some of the first to benefit would be those Brazilians waiting for new phone lines. Companies with cash are expected to go after them before competition moves in. Cleber Alves, a 21-year-old office intern, expects to finally get a phone line by December, two years after he went to the local Telesp SA (SAO:TLSP4) office and signed up to receive a new line. "If Telebras hadn't been privatized, I wouldn't expect to have a phone at all this year," the 21-year-old office intern said. "I have friends who had to wait a whole lot longer than that." shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8472)	9/24/1998 12:47:00 AM
From: Steve Fancy	Respond to of 22640

Brazil extends rate replacement until Nov. 11 Reuters, Wednesday, September 23, 1998 at 20:01 BRASILIA, Sept 23 (Reuters) - Brazil's Central Bank has extended until November 11 a period during which it lends to banks at its higher TBAN rate, currently 49.75 percent a year, and not at its TBC prime lending rate of 19 percent. The Central Bank substituted the TBC with the higher TBAN earlier this month to effectively raise Brazilian interest rates in a bid to slow dollar outflows. The move was originally due to expire September 30.

To: Steve Fancy who wrote (8472)	9/24/1998 12:48:00 AM
From: Steve Fancy	Respond to of 22640

Brazil forex mkts seen losing $600 mln Wednesday Reuters, Wednesday, September 23, 1998 at 21:01 SAO PAULO, Sept 23 (Reuters) - Brazil was seen losing another $600 million from foreign exchange markets on Wednesday, in a sign dollar outflows were showing signs of picking up speed again, traders said. As of 5 p.m. (2000 GMT), some $335 million had left Brazil through its commercial and floating forex markets, traders said. That total could reach $600 million by the time all forex contracts are registered, they said. Wednesday's estimated outflow showed an increase from Tuesday's, when total capital flight totaled $519 million. Outflows had been slowing to a daily average of $500 million this week, down from $1.5 billion per day earlier in the month. The slight jump in outflows on Wednesday forced the Central Bank to intervene in currency markets, selling dollars to offset capital flight, traders said. With the help of the intervention, the local real currency managed to end unchanged at 1.1835 to the dollar in the commercial market, dealers said. In the floating market, the real closed at 1.1855, also unchanged from Tuesday. But in the parallel market, the real ended at 1.300, down 0.78 percent. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8472)	9/24/1998 12:50:00 AM
From: Steve Fancy	Respond to of 22640

U.S. backs Brazil reforms, talks with government Reuters, Wednesday, September 23, 1998 at 22:33 WASHINGTON, Sept 23 (Reuters) - The United States on Wednesday praised Brazil's efforts to speed up long-planned tax reforms and said it was examining how the international community could help overcome a financial crisis there. But Treasury Secretary Robert Rubin Rubin, in a brief statement responding to the Brazilian plans, made no mention of President Fernando Henrique Cardoso's request for a special fund to help Latin America cope with its financial woes. "It is encouraging that (Cardoso's) administration is accelerating work on a strong fiscal plan," Rubin said. "We are in close touch with President Cardoso, his economic team and other international partners about how the international financial community can be helpful. Brazil's prosperity and financial stability is critically important to the United States and to the Americas more generally." Brazilian financial markets have taken a hammering in recent weeks, partly because of concern about tax policies and partly as a consequence of financial problems in Asia and Russia. Brazil has raised interest rates sharply to defend its currency, the real, but monetary officials say there it has not requested cash from the International Monetary Fund, which put together massive rescue deals in Asia and Russia. Cardoso, the hot favorite in Brazil's Oct. 4 presidential election, said on Wednesday he was prepared to have intensive talks with the IMF and other lenders if this was "in the interests of the country." Speaking at a prize-giving ceremony, he also stressed his readiness to attack a gaping fiscal deficit, his main financial headache before and after the election. The deficit is currently more than 7 percent of gross domestic product, and Brazil's persistent inability to rein it in are overshadowing what economists describe as impressive progress in other economic fields. "Brazil has made major progress, especially a dramatic improvement in inflation and privatization, but there has not been enough progress on the fiscal front, and that is the challenge ... that remains to be tackled," said Charles Dallara, managing director of the Institute for International Finance. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8472)	9/24/1998 12:54:00 AM
From: Steve Fancy	Respond to of 22640

Rubin: Brazil's Cardoso Speech Very Encouraging By HENRY J. PULIZZI; 202-862-9255 Dow Jones Newswires WASHINGTON -- A speech Wednesday by Brazil President Fernando Henrique Cardoso highlighting fiscal adjustment and reform in Brazil was "very encouraging," said U.S. Treasury Secretary Robert Rubin . "It is also encouraging the (Cardoso's) administration is accelerating work on a strong fiscal plan, and that Brazil's congressional leadership has indicated its willingness to consider key elements of this plan on an expedited basis," Rubin said in a statement. Rubin emphasized the importance of Brazil's economy to the U.S. "Brazil's prosperity and financial stability is critically important to the U.S. and to the Americas more generally," he said. "We are in close touch with President Cardoso, his economic team and other international partners about how the international financial community can be helpful," Rubin said.

To: Steve Fancy who wrote (8472)	9/24/1998 12:55:00 AM
From: Steve Fancy	Respond to of 22640

Brazil's Chief Judge Supports Cardoso Appeal On Savings Dow Jones Newswires BRASILIA -- In an unprecedented public statement, Brazil's Chief Judge Wednesday expressed full support for President Fernando Henrique Cardoso's appeal to all levels of government to undertake immediate savings. Earlier Wednesday, Cardoso urged state and local governments to cut expenditure urgently to achieve fiscal adjustments in view of the current financial turmoil battering Brazil. In a written statement, the Federal Supreme Court (STF) press office quoted Judge Celso de Mello as saying that "Cardoso's appeal was lawful and extremely important." "The seriousness of the (current financial) situation is such that this appeal can't be ignored," Judge Celso de Mello said. He added that public organs have to show that they are "prepared to confront the fiscal crisis in a responsible manner." The Chief Judge said the STF is already implementing the presidential advice and has canceled all its new furniture and fittings orders. -By William Vanvolsem; (5561) 244 3095; wvanvolsem@ap.org

To: Steve Fancy who wrote (8472)	9/24/1998 12:56:00 AM
From: Steve Fancy	Respond to of 22640

Spain's Telefonica Mulls Moving Up Telebras Unit Payments Dow Jones Newswires SAO PAULO -- Spain's Telefonica SA (TEF) said Wednesday it is talking with the Brazilian government about moving up the calendar for pending payments of its purchases of three units of Telecomunicacoes Brasileiras SA (TBR,TBH), the telecommunications holding privatized in July. A Telefonica spokesman confirmed that company executives were in Brasilia meeting with Finance Ministry officials Wednesday, but he said there was no decision on the payment schedule. The early payment would help Brazil's reserves, which have dropped by more than $20 billion since end-July to under $50 billion owing to financial turmoil. Telefonica would also save on financing costs. Telefonica has already paid 40% of its purchases of controlling stakes in the Sao Paulo fixed-line company Telesp and the cellular service Tele Sudeste Celular and the minority stake in Tele Leste Celular. Telefonica owes another 4.5 billion reals (BRL) ($1=BRL1.18) for the purchases. Under the privatization rules, 30% was due in 1999 and the final 30% in 2000. -By Mary Milliken; (55-11) 813-1988; mmilliken@ap.org