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

To: Steve Fancy who wrote (9047)	10/18/1998 10:44:00 PM
From: Steve Fancy	Respond to of 22640

WEEKAHEAD-LatAm stocks look to Brazil package Reuters, Sunday, October 18, 1998 at 18:03 By Tiffany Woods SANTIAGO, Oct 18 (Reuters) - Latin American stocks are set for mixed performance early this week on speculation over whether an expected fiscal package in Brazil will be the tonic to deflate its bloated budget deficit and avoid a devaluation, analysts said. An economic team is to present recently re-elected Brazilian President Henrique Cardoso with the plan on Tuesday, a spokesman at Brazil's finance minister said on Friday. Analysts expect Cardoso to unveil the measures on the same day or shortly after next Sunday's run-off gubernatorial elections. Brazil, the world's ninth largest economy, will have to save or raise at least 23 billion reais ($19.5 billion) to meet its target of a primary budget surplus -- excluding debt costs -- of between 2.5 and 3 percent of gross domestic product in 1999. Once the package is worked out, Brazil could become eligible for financial aid led by the International Monetary Fund. IMF managing director Michel Camdessus on Thursday said that a deal for Brazil could come in "a few days or weeks." Markets will also be watching to see if European countries imitate last week's interest rate cuts in the United States and Canada, analysts said. In BRAZIL, shares are seen rising on optimism over the expected austerity measures. "The market is going to get calmer as the time for Cardoso to announce fiscal measures nears," said Roque Sut Ribeiro, a fund manager for Banco Marka. "As long is there isn't some global catastrophe, we should see Brazil stocks post some recoveries," he said. Sao Paulo's key Bovespa index (INDEX:$BVSP.X) closed down 2.43 percent at 6,707 points on Friday before options on the benchmark Telebras receipts (SAO:RCTB40) expire on Monday. In MEXICO, stocks are set to wait for details of Brazil's plan, but will also be influenced by third quarter earnings reports which will start trickling into the market. The leading IPC <.MXX> index gained 387 points, or 11.26 percent in the past week, highlighted by a major rally Thursday after the cut in U.S. interest rates. "We've still got to see Brazil's fiscal adjustment program and the amount of (international) aid it will receive," said Esteban Rojas, deputy director of analysis at Arka brokerage. "We'll have to see if that removes some uncertainty, so (until then) there will be a certain amount of volatility," he added. In ARGENTINA, shares are expected to temper last week's enthusiasm with an urge to cash in gains and caution ahead of any announcements by Brazil on its budget package. "Things should be much calmer (this) week, with less seesawing. But we're probably going to see a small correction after these gains, probably leaving the MerVal at 410 points," said trader Lucio Bruno at Montelatici brokerage. The MerVal <.MERV> index of most traded shares closed up 9.5 percent at 422.25 points last week boosted mainly by selective stock picking and the surprise U.S. interest rate cut. The MerVal is still down 38.6 percent for the year. In CHILE, analysts were more confident that Brazil's fiscal package will do the trick, analysts said. "(Stocks) should trend higher. (The fiscal package) will probably be credible; therefore, bourses should rise and Chile should go up in the next few weeks," said Jose Manuel Silva, director of research at brokerage Larrain Vial. The IPSA <.IPSA> index of the leading 40 stocks ended up 4.71 percent on the week at 66.28 points. In VENEZUELA, investors are seen focusing on politics while stocks are set to continue marooned in a slump which saw the market's 15-share <.IBC> index slip 1.9 percent last week in daily trade averaging less than $2 million. Traders said investors were giving the market a wide berth in the run-up to gubernatorial and Congressional elections on November 8 and presidential elections on December 6. Former coup leader Hugo Chavez, whose nationalistic platform and military background worry investors, leads the polls. 696-0161)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9047)	10/18/1998 10:52:00 PM
From: Steve Fancy	Respond to of 22640

Short-Term Cap Flow Tax Could Fund IMF Plan - Brazil Cardoso Dow Jones Newswires OPORTO, Portugal -- Proposed reform of the international financial system could include taxing short-term capital flows, with the money going to finance an International Monetary Fund program for countries facing crisis, Brazilian President Fernando Henrique Cardoso said Sunday. "Part of the resources brought in by that tax could be used to create a stabilization fund, at the IMF's disposal," Cardoso said in a speech to the working session of the eighth annual Ibero-American summit. "Another part could be used by the World Bank, for programs to fight poverty." A copy of the speech was provided by Cardoso's spokeswoman. Cardoso emphasized any reform of the IMF's regulatory framework must address the problem of offshore investment funds, which can cause financial instability by cranking up leverage. "Without the regulation of investment funds and other non-bank institutions that work with off-balance or offshore operations, any (reform) measure would be ineffectual," Cardoso said. "These funds make the current level of leverage possible, introducing profound instability into the system." -By Erik T. Burns; 351-931-265-020; eburns@ap.org

To: Steve Fancy who wrote (9047)	10/18/1998 10:54:00 PM
From: Steve Fancy	Read Replies (3) \| Respond to of 22640

Brazil Agency Proposes Partial Govt Shutdown To Save Money Dow Jones Newswires BRASILIA, Brazil (AP)--A federally funded economic institute is advocating a partial government shutdown as a way for Brazil to save money, the Jornal do Brasil newspaper reported Sunday. Economists with the government-run Economic Research Institute, or IPEA, are proposing the shutdown of nonessential public services such as embassies as a way for Brazil to contain its burgeoning public sector deficit. The deficit, which now stands at about 7% of the country's gross domestic product, has been flagged as one of the most worrisome financial indicators and the one the government must improve if it is to weather the current financial crisis. "Some agencies can stop for a few months," IPEA economist Francisco das Chagas Pereira was quoted by the newspaper. Under the plan, government workers would still receive their paychecks, but the government would save on the costs of day-to-day operations. According to the Institute's figures, with the partial shutdown the government could end the year with a surplus of $8.4 billion, instead of the $4.2 billion envisioned in an emergency decree issued by President Fernando Henrique Cardoso at the height of the crisis. Pereira added that in 1999 the surplus could rise to $16.4 billion, or more than double the $7.3 billion envisioned in the budget currently before Congress. The advantage of the partial shutdown is that it can be done quickly and would not require new laws or Congressional approval, Pereira said. But officials at the Planning Ministry, which oversees the country's budget, are not convinced a partial shutdown will do the trick. "What good is to shut down temporarily?" the newspaper quoted Martus Tavares, the Planning Ministry's executive-secretary. The government has been delaying the announcement an austerity package aimed at cutting the ballooning deficit. Originally expected after the Oct. 5 election, the President Cardoso later delayed the announcement until Oct. 20. Now it seems that the package won't be announced until Oct. 26 - a day after second-round elections for governors in several states.