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

To: Steve Fancy who wrote (9169)	10/26/1998 3:43:00 PM
From: Tony van Werkhooven	Read Replies (1) \| Respond to of 22640

Steve- I assume that the strong showing of the opposition in runoff elections is what is hurting not only UBB but TBR. This apparently will make it more difficult to implement reform. Tony

To: Steve Fancy who wrote (9169)	10/26/1998 4:03:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil elections to hurt fiscal push-Congress head Reuters, Monday, October 26, 1998 at 15:24 BRASILIA, Oct 26 (Reuters) - The outcome of Brazil's elections for state governor Sunday will make it harder for the government to approve key fiscal measures in parliament, the head of Congress said Monday. "It's going to be harder to approve (the measures) because people are clearly stinging from defeat and are harder to convince, but we will do everything possible to convince them," Sen. Antonio Carlos Magalhaes. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9169)	10/26/1998 4:05:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shrs end off 4.1 pct on fiscal plan concern Reuters, Monday, October 26, 1998 at 15:43 SAO PAULO, Oct 26 (Reuters) - Brazilian shares slumped in moderate trade on Monday on expectations that an anxiously awaited fiscal plan may help Brazil improve its economy, but could also cut into profits on stock trading, dealers said. "The market is going to be nervous until the package is revealed," one trader said. "The increase in the CPMF is worrisome since it will make doing business in Brazil more expensive," he added, referring to the expected rise in the financial transactions tax to 0.35 percent from 0.20 percent. Sao Paulo's key Bovespa (INDEX:$BVSP.X) index ended off 4.1 percent at 6,972 points, dragged down by a sharp drop in Petrobras. The federally owned oil company's preferred shares (SAO:PETR4) ended off 7.0 percent at 146.01 reais. Veja weekly magazine reported this weekend that the government could end oil and gas subsidies to the industry worth 3 billion reais. Concern that a hike in the CPMF tax could send investors searching for bargains in New York also pushed stocks down. "Local and foreign investors are going to prefer trading in ADRs outside of Brazil," one trader said. The government plans to announce a series of spending cuts and tax increases on Wednesday aimed at reining in the budget deficit and clearing the way for an international loan. Brazil's Congress may also put up resistance to the proposal to raise the CPMF tax by more than initially expected, the head of the lower house said Monday, slowing the implementation of the sorely-needed measures. "This will be a negative surprise for Congress," Michel Temer said. "Since 0.3 percent was expected, when there is talk of 0.35 percent it gets more complicated." Shares worth 557.5 million reais traded hands on Monday. Among blue chips, Telebras preferred receipts (SAO:RCTB40) ended off 2.9 percent at 90.8 reais, while Eletrobras preferred (SAO:ELET6) closed off 6.9 percent at 26.9 reais. Iron ore miner Cia Vale do Rio Doce preferred (SAO:VALE5) closed unchanged at 17.5 reais. shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9169)	10/26/1998 4:26:00 PM
From: Steve Fancy	Read Replies (8) \| Respond to of 22640

After elections, Brazil's Cardoso must mend fences Reuters, Monday, October 26, 1998 at 16:17 By Joelle Diderich BRASILIA, Oct 26 (Reuters) - Brazilian President Fernando Henrique Cardoso will have to nurse battered egos and nourish old friendships after state elections called into question his power to push through measures to save the troubled economy. Cardoso saw an ally elected governor in Sao Paulo, Brazil's wealthiest and most populous state. But supporters were defeated elsewhere in Sunday's elections and analysts said on Monday that this would complicate his already daunting challenge of preventing a currency collapse. The president needs broad congressional support for a three-year fiscal plan -- expected to be announced on Tuesday or on Wednesday -- aimed at saving or raising at least $20 billion and clearing the way for an international financial aid package. While the regional elections results held few surprises, they have raised some doubts about how quickly Cardoso can get the plan through Congress to qualify Brazil for an expected $30 billion credit line led by the International Monetary Fund. "The president is in a difficult situation, but I don't consider it impossible," said Ricardo Pedreira, political analyst at consultancy Santa Fe Ideias. "The government now has to play hardball with all the big guns at its disposal." Brazil's state governors enjoy wide spending and taxing powers and influence the way their states' delegations vote in Congress. Long-time Cardoso ally and friend Mario Covas, who has won praise for his fiscal restraint and cost-cutting measures, was re-elected governor of economic powerhouse Sao Paulo state. But the victory of opposition candidates in Brazil's three other big states -- Rio de Janeiro, Minas Gerais and Rio Grande do Sul -- might complicate the president's attempts to include local governments in Brazil's fiscal drive. As a result, the president may postpone by a week a vote on three remaining amendments to long-delayed social security reform, initially scheduled for Nov. 3, giving him time to garner support in the Chamber of Deputies, analysts said. This would push back voting in Congress on a new, reduced version of the 1999 federal budget and measures contained in the fiscal plan, raising the prospect of lawmakers holding an extraordinary session in January to complete voting. It was unclear whether the IMF would delay announcing a loan for Brazil until all the fiscal reform steps have been voted on by Congress, or whether it would be enough for Congress to express support for the austerity drive, economists said. Even so, some thought political spats were a minor obstacle compared to the challenge that faces the government now -- actually implementing fiscal reforms in local governments. "This is an initial emotional reaction but I don't think it will be a big obstacle," said Marcelo Allain, economist at BMC Bank in Sao Paulo. "Another question which is just as important is the execution over the next four years." One of Cardoso's main challenges now will be to mend fences with candidates defeated on Sunday, some of whom are bitter the president failed to support them despite their loyalty in the past, analysts said. "The big problem will be the discontent and the open wounds which were left over from the electoral dispute," said Pedreira. Paulo Maluf, the leader of the Brazilian Progressive Party (PPB) who has helped push through reforms in Congress, was said to be upset after Cardoso taped television advertisements for Covas in the Sao Paulo state campaign. Supporters of former President Itamar Franco, who won Minas Gerais state, were also irritated that the government threw all its support behind incumbent Gov. Eduardo Azeredo, who belongs to Cardoso's Brazilian Social Democratic Party (PSDB). Franco, of the government-allied Brazilian Democratic Movement Party (PMDB), has been an increasingly vocal critic of the pro-market policies of Cardoso, who was formerly his finance minister. Copyright 1998, Reuters News Service