Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Steve Fancy who wrote (8894)	10/7/1998 10:22:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's real ends firmer expecting net dlr inflow Reuters, Wednesday, October 07, 1998 at 16:39 SAO PAULO, Oct 7 (Reuters) - Brazil's real currency ended 0.03 percent firmer at 1.1825 to the dollar on Wednesday, helped by expectations the day would end with a net inflow of dollars in foreign exchange markets, dealers said. With an expected net inflow of $100 million on Wednesday, Brazilian currency markets were seen posting net dollar inflows for a second day in a row. A net $101 million entered the commercial and floating markets on Tuesday. The steady inflow of dollars was not enough to assure investors that a huge wave of dollar flight from Brazil's currency markets was ebbing, but it soothed market players at least for today, dealers said. Brazil has lost about $29 billion through its currency markets since the beginning of August as investors fled from emerging markets, frightened by Russia's financial crisis. In the floating forex market, the real strengthened 0.01 percent to 1.1886 to the dollar, while in the parallel market, the Brazilian currency weakened 0.38 percent to 1.310 per dollar. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8894)	10/7/1998 10:23:00 PM
From: Steve Fancy	Respond to of 22640

CSFB sees recessions in Brazil, Venezuela in 1999 Reuters, Wednesday, October 07, 1998 at 17:21 MEXICO CITY, Oct 7 (Reuters) - Credit Suisse First Boston said on Wednesday it expected Brazil's gross domestic product to contract by 2.2 percent next year and Venezuela's by 2.3 percent. CSFB said in a report it expected just 0.7 percent GDP expansion in Brazil this year and 0.5 percent growth in Venezuela for 1998. For Latin America as a whole, the investment house said it expected economic expansion to slip to just 0.7 percent in 1999 after 3.0 percent growth in 1998. "We have significantly revised our growth projections and the result is an overall cut in Latin America's contribution to global activity," CSFB said. "Brazil and Venezuela will experience recessions." The brokers said slower growth was inevitable in 1999 to prevent a widening of current account deficits while the financing environment gets tougher. "Thus Latin America will contribute to a deflationary cycle that threatens to engulf the global economy in the near future. Still, that reduction in growth may not be enough to maintain stability." CSFB said the regional current account deficit should be contained at about the same level as 1998 because of narrower trade gaps, especially in Brazil. In terms of GDP, trade deficits are expected to average 4.2 percent, with Chile and Colombia recording the widest imbalances. In addition, Credit Suisse said it expected foreign reserve growth to be minimal as most countries try to meet financing needs in an environment of substantially reduced capital inflows. However, preventive measures to seek financing from non-market sources suggested there would be no immediate credit crunch. In addition to the negative growth forecasts for Brazil and Venezuela, CSFB estimated GDP expansion in 1999 of 2.6 percent for Argentina, 2.9 percent for Chile, 2.0 percent for Colombia and 2.5 percent for Mexico. mexicocity.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8894)	10/7/1998 10:27:00 PM
From: Steve Fancy	Respond to of 22640

Emerging debt wanes on Brazil disappointment, Dow Reuters, Wednesday, October 07, 1998 at 17:25 NEW YORK, Oct 7 (Reuters) - Emerging debt prices drifted Wednesday on news that a Brazilian deficit reduction program may remain weeks away, traders and analysts said. Brazilian President Fernando Henrique Cardoso said on Wednesday that he was not planning a post-election "package" of fiscal measures. Instead, Cardoso said he wanted his economic team to prepare a three-year fiscal adjustment plan for his review by Oct. 20. "The market is disappointed that there will not be an immediate fiscal package in Brazil," said Pablo Goldberg, a vice president in fixed income research at ABN-AMRO. Traders said they had hoped for quicker release of details about Cardoso's plan for reducing the country's budget deficit, which stands at more than seven percent of gross domestic product. Meanwhile, U.S. Treasuries sold off in sympathy with the U.S. dollar, which plunged more than 9 percent against the Japanese yen on Wednesday as investors reportedly liquidated short yen positions. Wall Street stocks fell on Wednesday with investors hounded by fears of a U.S. economic slowdown and shrugging off signs Japan may be coming to grips with its ailing banking system. The Dow closed unofficially off 1.29 points at 7741.69, after whipsawing between negative and positive terrain. "The sell-off in Treasuries and the stock market brought us down," one emerging debt trader said. "The emerging debt market is also reacting to Cardoso saying it will be at least a couple of weeks before he can announce any significant cuts." Spreads in emerging market bonds stood at about 1350 basis points over Treasuries Wednesday, about 11 basis points wider on the day, ABN-AMRO's Goldberg said. "The movement in dollar/yen is positive for Latin American sovereign debt because many Latin currencies are linked one way or another to the U.S. dollar," Goldberg said. "A cheaper dollar implies a real depreciation of those Latin currencies, which is good for Latin exports." Benchmark Brazil C bonds <BRAZILC=RR> ended up 1/8 at 60-1/4. At their high point Wednesday, Brazil Cs were bid at 61-3/4. Argentine PAR paper <ARGPAR=RR> closed down 1-1/2 to bid 66-3/4. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8894)	10/7/1998 10:29:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Central Bank says leaves rates unchanged Reuters, Wednesday, October 07, 1998 at 20:40 BRASILIA, Oct 7 (Reuters) - Brazil's Central Bank Wednesday left its basic assistance rate unchanged at 49.75 percent and its prime lending rate also unchanged at 19.00 percent, the bank said in a statement. Traders said earlier they expected no change in monetary policy because of a global crisis in emerging markets which has triggered a massive outflow of dollars from Brazil, putting pressure on the domestic currency, the real. The Central bank hiked the benchmark basic assistance rate, known as the TBAN, to an annualized 49.75 percent on Sept. 10 in an effort to stem the dollar outflow. Brazil has lost about $29 billion through its currency markets since the beginning of August after a devaluation in Russia triggered a global flight from emerging markets. But local foreign exchange markets were expected to post a net dollar inflow of $100 million Wednesday, its second consecutive day of inflows after six weeks of almost constant dollar flight. The TBAN has been the benchmark rate for Brazil since early September, when the Central Bank announced it would stop lending to other banks at the prime lending rate, known as the TBC, which stands at 19 percent per year. 5561 223-5918)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8894)	10/7/1998 10:32:00 PM
From: Steve Fancy	Respond to of 22640

Argentine official sees $35-50 bln Brazil package Reuters, Wednesday, October 07, 1998 at 20:47 WASHINGTON, Oct 7 (Reuters) - Argentine Undersecretary of Finance Miguel Kiguel said on Wednesday that he expected an international package for Brazil to total $35-50 billion. Kiguel said the talk among the world's top finance officials at the IMF/World Bank annual meetings this week was that a package of between $35-50 billion dollars was being prepared for Brazil. The funds would be enough to restore confidence in the Brazilian currency, provided the government cuts spending by two to three percent of GDP, he said. "In my view that will be enough, assuming that there is a fiscal package of the type the Brazilians are talking of, somewhere between two and three percent of GDP in fiscal adjustment," Kiguel told Reuters Financial Television in an interview. "A package of that type would be sufficient to stabilize Brazil and if Brazil stabilizes, Latin America would return very rapidly to the markets," Kiguel said. washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8894)	10/7/1998 10:33:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Bovespa (INDEX:$BVSP.X) slumps after Cardoso speech Reuters, Wednesday, October 07, 1998 at 20:57 SAO PAULO, Oct 7 (Reuters) - Brazilian shares closed off 2.84 percent on Wednesday after President Fernando Henrique Cardoso crushed investor expectations for immediate steps to rein in the fiscal deficit during a speech, traders said. "We all would have liked to hear more details, or an indication that (fiscal) measures will be quickly implemented," a trader at a local brokerage said. Sao Paulo's key Bovespa index of the most traded shares tumbled to 6,157 points, also tracking a slight downturn on Wall Street at the time Brazil's market closed. Shares worth 364.18 million reais traded hands. The market had been hoping that Cardoso would announce far-reaching spending cuts in his first public speech since Sunday's elections. Cardoso is poised to be Brazil's first democratically re-elected president. "The speech had a negative effect on the market, which was already weakened by Wall Street," another trader said. "The president didn't say anything new." The Bovespa, which lost almost half of its value in the wake of the Russia crisis, extended losses after the speech. Sorely-needed fiscal measures are expected to reduce the country's budget deficit and pave the way for foreign aid. While Cardoso said he expects to review a fiscal budget proposal for 1999-2000 by Oct. 20, investors were disappointed that he didn't propose specific measures. Among blue-chip stocks, the bellwether Telebras preferred receipts (SAO:RCTB40) closed off 3.15 percent at 79.90 reais, while state-owned oil company Petrobras preferred (SAO:PETR4) slumped 1.71 percent to close off at 115 reais. Energy holding company Eletrobras preferred (SAO:ELET6) bucked the trend, inching up 0.44 percent to close up at 22.90 reais while iron ore miner Cia Vale do Rio Doce preferred (SAO:VALE5) ended off 1.68 percent at 18.19 reais. shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8894)	10/7/1998 10:47:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

$1.2 Billion In Failed Emerging Mkt Debt Trades Canceled Dow Jones Newswires NEW YORK -- The Emerging Markets Clearing Corp. canceled approximately $1.2 billion in failed trades last week, principally Brazilian IDU and Capitization bonds. After gaining emergency clearance from the Securities and Exchange Commission on Sept. 24, seven member firms spent four days pairing-off failed transactions, concluding the process last Wednesday. The cancellations involved EMCC's principal members: Chase Securities, Daiwa Securities America, Lehman Brothers, Goldman Sachs, Morgan Stanley Dean Witter, Merrill Lynch and Solomon Brothers. EMCC Vice President Sean Delap said that over 90% of the cancellations involved Brazilian debt instruments. As a result of the pair-offs, EMCC reduced the number of open fail positions by half, to around 1,000. EMCC filed for permission to begin the pair-offs after a recent surge in the number of failed transactions on its books. In its request, the clearing house noted that during the last few weeks, the settlement rate on "certain instruments" had plunged below 50% from the usual 98%. In its decision, the SEC agreed with EMCC's contention that by eliminating buy-ins, the pair-offs will reduce the potential for market volatility. The rule change allows EMCC to conduct pair-offs "as frequently as (it) deems necessary." Some in the market were sharply critical of the SEC decision to allow the cancellation of the failed trades. Critics charged that it reduced the transparency of the market and benefited professional traders at the expense of others. "If you can show me one person that benefits from this other than the professionals, I'd like to hear about it," said one head trader, who asked to remain anonymous. The trader charged that the process essentially granted traders "a free short." "This is hugely advantageous to the professionals, and hugely disadvantageous to Brazil," he said, arguing that it was fast becoming "a rigged market." Delap, of the Emerging Markets Clearing Corp., denied the move would encourage traders to take short positions. "Traders are going to do what traders are going to do," said Delap, adding that the new rule merely formalized a process that banks previously performed one-on-one. Given the number of professional investors going short on Brazilian bonds, many agreed the move was inevitable. "The system is sort of breaking down right now," said one trader. He noted that Argentine FRB's were also being heavily shorted, and could be subjected to similar moves in the future. -By Thomas Catan; (201) 938-2225; thomas.catan@cor.dowjones.com