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

To: Steve Fancy who wrote (9051)	10/19/1998 11:49:00 AM
From: Steve Fancy	Respond to of 22640

Wall Street sees risks if Cardoso plan is delayed Reuters, Monday, October 19, 1998 at 10:10 By Hugh Bronstein NEW YORK, Oct 19 (Reuters) - Brazil's president may want to shore up his political support by delaying painful fiscal steps until after elections later this month, but doing so could expose the country to economic shocks in the interim, U.S. analysts said. President Fernando Henrique Cardoso is expected to wait until after the Oct. 25 gubernatorial elections to reveal the specifics of the budget cuts and revenue increases the country hopes will close its yawning fiscal deficit. "The longer it takes for Brazil to release the details and to show progress toward enacting legislation, the more vulnerable Brazil becomes to 'event risk' such as additional failures of financial institutions or continued earnings disappointments in the U.S. and Europe," said John Mullin, director of Latin American equity strategy at ABN Amro Inc. Brazil spends about $350 million in foreign exchange reserves per day to support its currency while the political uncertainty lasts, analysts said. "If they wait too long, Brazil could find itself in a very deep problem," Mullin said Other analysts agreed, but they also said it would be risky for Cardoso to talk publicly about painful economic proposals before his potential allies go before the voters. Support from governors will be important to strengthen Cardoso's hand in negotiating with Congress, said Siobhan Manning, Latin American debt strategist at PaineWebber. Cardoso got a boost early this month when a final first-round vote in Brazil's most powerful state, Sao Paulo, showed his ally Mario Covas narrowly qualifying for a second-round run-off against former Sao Paulo mayor Paulo Maluf. Should Maluf win the election, many political analysts believe he may begin planning a shot at the presidency in 2002 and that he may oppose unpopular cost-cutting measures to boost his popularity. "Cardoso is weighing the trade-off between another two to three billion (dollars) in foreign exchange reserve losses versus the negotiating power that a Covas victory will give him," Manning said, estimating the cost of a delay in announcing the fiscal package until after Oct. 25. "I would like to see Cardoso act immediately, but he has to build support in Congress to approve all these measures," she added. "That ultimately is the factor that will restore investor confidence." Desmond Lachman, emerging markets strategist at Salomon Brothers, said the risk of waiting until after Oct/ 25 is minimal, thanks to Brazil's war chest of reserves. "Brazil's reserves are very high, outflows are modest and we're only talking about waiting a week," Lachman said. "It makes sense for them to delay the details for a week if it increases the chance of a better electoral outcome on Oct. 25." But confidence in Brazil has little chance of improving until a detailed Cardoso plan is revealed, a step that is expected to lead the International Monetary Fund to provide a support package for Latin America's largest economy, said Felipe Garcia, Latin American economist at I.D.E.A, an economic research firm that provides data to commercial and central banks. "At $45 billion, they have enough in foreign exchange reserves, but they have less every day," Garcia said. "Meanwhile, they have to maintain high interest rates to prevent those outflows from increasing. This puts red ink into the country's fiscal accounts and market confidence is eroding." Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9051)	10/19/1998 11:51:00 AM
From: Steve Fancy	Respond to of 22640

Brazil shrs seen opening weak, waiting gov't steps Reuters, Monday, October 19, 1998 at 09:29 SAO PAULO, Oct 19 (Reuters) - Brazilian stocks are seen opening on a weaker note on Monday as investors opt to stay away from the market while they wait for the government to announce fiscal measures, which may happen soon, traders said. "The market will tend to be more pessimistic for now while there is no news," said a Bozano, Simonsen trader. "Weaker S&P future prices in New York may weigh on the opening." On Friday, Sao Paulo's key Bovespa index (INDEX:$BVSP.X) closed off 2.43 percent at 6707 points after a volatile session as investors shifted their positions ahead of today's expiration in share option contracts. Traders said the expiry may still put pressure on prices today, but that volume was expected to diminish. Brazilian financial markets have been eagerly waiting for the government to release the contents of budget cut measures, which were slated to be drawn up by Tuesday. Brazil is expected to earn financial support from the international community with those measures. Brazilian President Fernando Henrique Cardoso may finally announce those cut proposals this week, or wait until after the second round of gubernatorial elections are held on October 25, market analysts speculated. Blue-chip activity Friday: Telebras receipts (SAO:RCTB40) off 3.1 pct at 87.20 reais Petrobras (SAO:PETR4) up 0.71 percent at 139 reais Eletrobras (SAO:ELET6) up 1.18 pct at 25.8 reais Vale do Rio Doce (SAO:VALE5) unchanged at 17.30 reais Bovespa: * Friday: off 2.43 pct at 6,707 points * Week: up 2.7 pct * Month: up 1.7 pct * Year-to-date: off 34.2 pct SELIC (open): 4.15 pct Dollar/Real (open): 1.1895 per dollar YESTERDAY'S STORIES 1/8 1/4SUR 3/8 ***** SPOT REAL QUOTES <BRBY> BOVESPA STOCK INDEX (INDEX:$BVSP.X) ELECTRICAL ENERGY INDEX <.IEE> BRAZILIAN ADR PRICES <BR/ADR> BRAZILIAN BRADY BOND PRICES <2LDO> BRAZILIAN DOLLAR FLOW HISTORY <BRFLOW> Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9051)	10/19/1998 11:52:00 AM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil dollar outflows slow to $99 mln on Friday Reuters, Monday, October 19, 1998 at 09:29 SAO PAULO, Oct 19 (Reuters) - Brazil's dollar outflows from foreign exchange markets slowed to a slim $99 million on Friday as a Spanish bank brought in cash to help pay off its purchase of a Brazilian bank earlier this year, traders said. But even with Banco Bilbao Vizcaya's (MADRID:BBV) introduction of some $640 million, strong outflows ensured yet another day of net dollar loss for Brazil. The Central Bank registered net inflows of $239 million in the commercial forex market and traders said net outflows in the floating forex market totaled $338 million. BBV brought in the cash to put toward its acquisition of Banco Excel Economico (SAO:BEXC4), which was made official in August. Brazil has lost more than $30 billion through its forex markets since the beginning of August, when a devaluation in Russia sparked a wave of capital flight from emerging markets. A sharp hike in interest rates has helped to slow the flows, though dollars are expected to continue leaving Brazil this month as some $3 billion in foreign corporate bonds and loans come due. Copyright 1998, Reuters News Service