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

To: Steve Fancy who wrote (9368)	11/3/1998 10:47:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shrs end up 6.55 pct on eve of crucial vote Reuters, Tuesday, November 03, 1998 at 20:55 SAO PAULO, Nov 3 (Reuters) - Brazilian shares roared higher Tuesday lifted by optimism that Congress would approve a key reform bill on Wednesday, paving way for the government to implement promised budget cuts, traders said. The market's key Bovespa index (INDEX:$BVSP.X) ended up 6.55 percent at 7,509 points, building on a 7.8 percent jump on Friday triggered by a declaration from the Group of Seven nations that they would back Brazil's fiscal adjustment commitments. Markets were closed on Monday due to a national holiday. "The market sees there is a very good chance the government will get the social security reform bills cleared without any problem," said one trader. The lower house of Congress was to vote on Wednesday on the final three amendments to a long-delayed social security reform bill. The vote is viewed as a key test for the government to see how much support it can get for its new fiscal plan. The government had announced last week it would save a total of $84 billion over the next three years through spending cuts and tax hikes. The austerity plan was required of Brazil to secure forthcoming international aid. However, more than 80 percent of the announced measures require Congressional approval. Among Brazilian blue chips, Telebras preferred receipts (SAO:RCTB40) jumped 5.49 percent to 96 reais, while Telesp Participacoes (SAO:TLPP4) added on 9.84 percent to 33.50 reais. Petrobras preferred (SAO:PETR4) rose 9 percent to 163.50 reais, while Eletrobras preferred (SAO:ELET6) 8.7 percent to 30 reais. Volume was a moderate 473 million reais ($400 million). Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9368)	11/3/1998 10:49:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shares soar on optimism ahead of key vote Reuters, Tuesday, November 03, 1998 at 20:55 SAO PAULO, Nov 3 (Reuters) - Brazilian shares soared in late trade Tuesday as optimism spread in the market that a key reform would be approved in Congress on Wednesday, increasing the government's chances of carrying out promised budget cuts, traders said. The blue-chip Bovespa index (INDEX:$BVSP.X) shot up 5.81 percent to 7,457 points at 1708 local time/1408 EDT/1908 GMT, with less than an hour of trade left. "The market is increasingly more optimistic about Wednesday's vote, also as there is no other negative news around," said one local trader. The lower house of Congress was to vote on Wednesday on the final three amendments to a long-delayed social security reform bill. The vote is seen as a key test for the government to see how much support it can get from Congress on its new fiscal savings plan. The government aims to save a total of $84 billion over the next three years through spending cuts and tax hikes. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9368)	11/3/1998 10:50:00 PM
From: Steve Fancy	Respond to of 22640

Emerging debt firms slightly, focus on Brazil vote Reuters, Tuesday, November 03, 1998 at 20:56 NEW YORK, Nov 3 (Reuters) - Emerging debt firmed slightly Tuesday after initial softness related to a $300 million reopening of an Argentine bond early in the day, analysts said. Contributing to the early drop in prices, unconfirmed rumors circulated that the Brazilian Congress had canceled a key vote scheduled for Wednesday on social security reform. "The market is well supported on the expectation that the Brazil vote is going to go through," said Thomas Trebat, head of emerging markets research at Citicorp Securities. "If it doesn't, the market is in for a rough ride tomorrow." The lower house of Congress is expected to vote on three opposition-sponsored amendments intended to water down the social security reform plan proposed by President Fernando Henrique Cardoso. The Cardoso team is determined to hold the votes on Wednesday, though there is no assurance that quorum will be reached. The votes are seen as an early indicator of whether Cardoso can deliver the huge budget cuts promised in the recent fiscal package. Benchmark Brazil C bonds <BRAZILC=RR> ended the day unchanged at 62-1/2 bid, and Argentine pars <ARGPAR=RR> were up 5/8 to 71-1/8. Brazil's austerity plan is widely seen as essential to restoring investor faith in Brazil's battered economy, the world's eighth largest. The country has lost $30 billion to capital flight since Russia's devaluation in mid-August shook confidence in emerging markets. Brazil is also in negotiations for a financial package led by the International Monetary Fund, expected to total between $30-45 billion, to shore up the country's finances and regain investor confidence. Elsewhere, Argentina's healthy economic fundamentals helped account for the strong demand exhibited for Tuesday's $300 million reopening of an Argentine bond. "Given the global focus on liquidity right now, investors generally prefer a well-priced reopening to a new bond issue," said Cynthia Powell, who heads the international syndicate desk at Chase Securities in New York, which led the reopening. The deal was easily sold to a dozen institutional investors, Powell said. The bond originally came out two years ago at $1.0 billion, maturing in 2006. Tuesday's reopening was priced at 98.28 with a yield of 11.33 percent, Powell said. It was the third time Argentina tapped the international bond market in the last month, raising more than $850 million in total. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9368)	11/3/1998 10:51:00 PM
From: Steve Fancy	Respond to of 22640

Brazil not seen cutting rates until after IMF deal Reuters, Tuesday, November 03, 1998 at 20:56 By Joelle Diderich BRASILIA, Nov 3 (Reuters) - Brazil's fiscal austerity plan has opened the door for a cut in the country's sky-high interest rates, but a monetary easing will have to wait until officials thrash out an international loan deal, economists said Tuesday. The Central Bank's monetary policy committee is scheduled to hold its next meeting on Nov. 11, but few expect it to take the shears to the basic assistance rate, or TBAN, which currently towers at an annualized 49.75 percent. Instead, analysts expect the Central Bank to rapidly lower the benchmark overnight rate, known as the Selic, which its sets daily through informal auctions in the open market. "There is a possibility that it will reduce the TBAN, but the likeliest outcome is that it will reduce the Selic," said Marcelo Allain, chief economist at BMC Bank in Sao Paulo. Economists say Brazil must cut interest rates urgently to reduce the burden of paying interest on debt -- a key contributor to a gaping budget deficit -- and limit the depth of a recession forecast to hit the economy in the first half of next year. But any rate reduction will depend on two key events: Congressional approval of the three-year fiscal plan announced last week and the announcement of a multibillion-dollar deal from the International Monetary Fund (IMF) and other global lenders. "Once that deal is effectively sealed and there are a few favorable votes for the government (in Congress)...I think interest rates can fall very quickly," said Odair Abate, chief economist at Lloyds Bank in Sao Paulo. The Selic rate could drop to around 30 percent by the end of November from 42.70 percent Tuesday, but any further cut would depend on the government's success in restoring investor confidence in its battered economy, analysts said. Lowering the overnight rate is seen as crucial because a large portion of Brazil's debt is indexed to the rate, and unless it falls rapidly the growing size of interest payments could cancel the benefits of the fiscal plan. "Brazil took 10 months to bring interest rates back to the levels they stood at before the Asian economic crisis," said Abate. "This time, they will have to be more rapid." Brazilian and IMF officials worked through the weekend on the terms of a loan package aimed at saving the world's eighth largest economy from a currency collapse which would have devastating consequences for Latin America as a whole. A senior Central Bank official said Friday he expected a deal to be signed within days, but local analysts believe any announcement will only come in the second half of the month. In the meantime, all eyes turned to Congress, which was due to vote Wednesday on three remaining amendments to a long-delayed social security reform bill in what is being seen as a key test of the government's ability to push through tough fiscal steps. A defeat at this stage would signal a bumpy road for unpopular measures which urgently need lawmakers' approval. "We don't see substantial room for an improvement in expectations (in the short-term)," said Roberto Padovani, economist at consultancy Tendencias. "But once expectations improve, the Central Bank can cut rates as much as possible." Brazil sharply hiked interest rates in September to stem a massive outflow of dollars after a devaluation in Russia sparked a crisis of confidence in emerging markets as a whole. The Finance Ministry said last week it expected the overnight rate to fall to 22 percent by mid-1999, still above its level of 19 percent a year before the Russian crisis hit in August. But few economists saw the forecast as an effective indication of monetary policy, saying the government was merely indicating the interest rate levels on which it based its calculations of fiscal savings. "It is neither a commitment nor a signal to society that this is what is going to happen," said Allain. joelle.diderich@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9368)	11/3/1998 10:56:00 PM
From: Steve Fancy	Respond to of 22640

FOCUS-Brazil capital exodus thins, fiscal plan key Reuters, Tuesday, November 03, 1998 at 20:55 By Mary Milliken SAO PAULO, Nov 3 (Reuters) - Brazil's capital exodus slowed sharply in October to $1.89 billion from $18.88 billion in crisis-torn September, but could resume if the government fails to come good on its fiscal austerity plan, economists said Tuesday. "The parameters are very much tied to progress with the fiscal plan, and in 30 days or so we should know how it is going," said Odair Abate, chief economist at Lloyds Bank in Sao Paulo. By that time, Brazil's Congress will have shown how willing it is to pass the more prickly aspects of the three-year fiscal plan unveiled last week, such as cuts into civil servant privileges and higher taxes. Also by the end of November, Brazil should know the size, timing and conditions of a financial aid package led by the International Monetary Fund, expected to amount to between $30-45 billion. If the fiscal plan and IMF package fall into place, Brazil should end the year with a comfortable foreign capital flow situation. "I think the trend is toward stability, but the flows will continue to be negative," said Diniz Pignatari, director of foreign exchange at ING Bank in Sao Paulo. Pignatari expects Brazil to lose a net $2 billion through its exchange market over the next two months, while the country's foreign reserves will fall to an "acceptable" $40 billion. Reserves were $43 billion to $44 billion last week. Brazil needs a steady flow of dollars to finance its high current account deficit, now at 4.4 percent of GDP, and its gaping budget deficit, equal to 7 percent of GDP. Capital outflows through the commercial and floating foreign exchange markets in October of a combined net $1.89 billion is already a big improvement on September and August, when a net $31 billion left the country. Emerging market investors, spooked by Russia's mid-August devaluation and debt default, unloaded Brazilian assets and left the country's foreign reserves at $45 billion at end-September from $70 billion at end-July. At the height of the exodus in mid-September, the Central Bank jacked up its key lending rate to 49.75 percent from 19.0 percent to stem the bleeding. But even with the attractive interest rates, outflows continued to outpace inflows almost every day and the October gap would have been even deeper if not for one-off direct foreign investments worth about $7 billion. The bulk of those inflows, or $4.9 billion, came in the form of early payments from Spain's Telefonica SA (MADRID:TEF) , Iberdrola SA (MADRID:IBE), and Portugal Telecom (LIS:PTCO) for units in the privatization of telecommunications holding Telebras on July 29. For November, the capital flows will see some respite from debt redemptions. Corporate Eurobonds redemptions this month are expected at around some $300 million from $1.6 billion in October, according to market estimates. Brady bond redemptions, which take place outside Brazilian exchange markets, should fall to $50 million from $1.5 billion in October. This month is also likely to see a slowdown of corporate dividend remittances after multinationals repatriated capital ahead of schedule when devaluation of Brazil's currency looked like a real possibility in September. "Many people already sent their money and there's not a lot left over that can leave, especially speculative money," said Pignatari. "Whoever still has money here is probably going to stay." Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9368)	11/3/1998 10:57:00 PM
From: Steve Fancy	Respond to of 22640

Latam stocks rise after holiday amid Brazil hopes Reuters, Tuesday, November 03, 1998 at 22:23 MEXICO CITY, Nov 3 (Reuters) - Latin American stocks firmed on Tuesday, catching up with gains posted on Wall Street the previous day, when most countries in Central and South America were celebrating the Day of the Dead holiday. "The market was above all influenced by the movement yesterday on the Dow Jones, which rose 1.33 percent," said Hector Jimenez, head of research at the Inverlat brokerage in Mexico City. Even so, the gains also reflected optimism that the Brazilian Congress was about to approve the first step in an austerity plan designed to make Latin America's biggest economy less vulnerable to devaluation pressures that could trigger a regional financial crisis. "The market sees there is a very good chance the government will get the social security reform bills cleared without any problem," said a trader in Sao Paulo, Brazil's financial capital, referring to long-delayed measures viewed as critical to the government's effort to stem the country's yawning budget deficit. The Bovespa index of most active stocks in Sao Paulo leaped by 6.55 percent to close at 7509 points at moderate volume. Concerns that Brazil might abandon close control of its currency have haunted brokers around Latin America since Russia devalued its rouble at the end of August and served as an uncomfortable reminder of the regional crisis that followed Mexico's disastrous devaluation of December 1994. Brazil's $84 billion austerity plan, announced last week, and signs of aid to come from the International Monetary Fund have slowly brought confidence back to Latin markets, although they are still much in the red for the year to date. Brazilian stocks have lost 31 percent so far this year, Argentine stocks have dropped 29.2 percent and Mexico's bourse has tumbled 36.3 percent in dollar terms. Key Brazilian and Mexican stocks gained on Tuesday because they had lagged behind their corresponding American Depositary Receipts, which rose on Wall Street the previous day while Latin American markets were closed, dealers said. In telecommunications, Telebras preferred receipts (SAO:RCTB40) jumped 5.49 percent in Sao Paulo, while Mexico's Telefonos de Mexico edged up 0.4 percent. On the New York Stock Exchange, the Dow Jones Industrial Average closed unchanged on Tuesday at 8706.15 points as dealers sat on the sidelines awaiting the outcome of U.S. midterm congressional elections. Mexico's 35-share IPC index rose by 1.30 percent to 4127.85 points, with the peso currency regaining ground from the dollar and forecasts calling for an imminent decline in local interest rates. Soaring shares in Brazil and a firm tone on Wall Street also buoyed stocks Argentina, where the Merval index climbed 2.41 percent to 485.98 points amid brisk activity, traders said.. "The fear is over and now we're all at the party," said trader Lucio Bruno at Montelatici brokerage in Argentine capital Buenos Aires. Smaller Latin American markets focused on local factors rather than looking for signals from their powerful neighbors. After a cut in Chilean interest rates, Santiago's benchmark IPSA index jumped 4.11 percent to 76.37 points. Venezuela's leading IBC index jumped 6.01 percent to 3943.03 points when a benchmark utility company reported increased profits. mexicocity.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9368)	11/3/1998 11:02:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Malan sees economy recovering in 1999 Reuters, Tuesday, November 03, 1998 at 20:55 BRASILIA, Nov 3 Reuters) - Brazilian Finance Minister Pedro Malan said Tuesday that the national economy could recover from an expected slump and resume growth before the end of next year. "We believe we have every possibility of recovering the direction of Brazilian economic growth starting in 1999, principally if we do what has to be done," Malan said in a hearing with lawmakers on the government's austerity plan. The government last week unveiled a series of tax increases, budget cuts and other measures to help Brazil cut its huge budget deficit and survive global financial turmoil. At the time, the Finance Ministry said it expected Brazilian economic output to shrink by 1 percent in 1999, down from growth of just 0.5 percent this year. Malan said Brazil would cut its towering interest rates of more than 40 percent, but the onus lay with Congress which must vote on many measures included in the austerity plan. "We will lower interest rates, (but) we must do it in a responsible manner," the minister said. The government's attempts to get its austerity plan through Congress are set to begin Wednesday when the lower house is due to vote on a final three amendments to a long-delayed pension reform bill. Malan also ruled out any change in Brazil's foreign exchange policy and said progress was being made in talks with the International Monetary Fund over a possible multibillion-dollar credit line for the country's crisis-torn economy. william.schomberg@reuters.com))

To: Steve Fancy who wrote (9368)	11/3/1998 11:03:00 PM
From: Steve Fancy	Respond to of 22640

Brazil loan package talks seen lasting all week Reuters, Tuesday, November 03, 1998 at 20:55 WASHINGTON, Nov 3 (Reuters) - Brazilian finance officials negotiating the terms of a multibillion-dollar loan deal with the International Monetary Fund said on Tuesday they expected to continue in Washington through the end of the week. The Brazilian negotiators led by Finance Minister Pedro Malan's top aide, Amaury Bier, said they continued to work on a letter of intent laying out Brazil's policy commitments. Bier would not comment on where they were in the talks. The letter of intent would specify economic targets and the amount of financial aid Brazil thinks it needs to see itself out of the woods in the current world credit crunch. Brazil's government, which has sustained severe pressure on the currency since the Russian default in August, said on Friday it hoped to have an agreement "within a few days." The international package is expected to include at least $30 billion in loans from the IMF, the World Bank, the Inter-American Development Bank and a new contingency fund credit line proposed last week by the G7 industrial nations. Brazil, the world's eighth largest economy, needs the credit to recover investor confidence and stave off fears of a devaluation. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9368)	11/3/1998 11:05:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil estimated net forex inflow $50 mln--traders Reuters, Tuesday, November 03, 1998 at 20:55 SAO PAULO, Nov 3 (Reuters) - Brazil's foreign exchange markets received an estimated net inflow of $50 million on Tuesday, possibly posting its first net hard currency inflow in two weeks, traders said. Expectations of an inflow helped the real strengthen 0.15 percent against the dollar in the commercial forex market, finishing at 1.1912 to the U.S. currency, they said. At 1700 local/1900 GMT, forex markets registered a net inflow of $100 million in the commercial market and a net outflow of $60 million in the floating market, traders said. Traders predicted an overall trend of dollar outflows from Brazil's currency markets would ease this month as fewer eurobonds and short-term agricultural loans known as "63 Caipiras" came due. Brazil's capital outflow had already slowed dramatically to a net $1.89 billion in October from $18.88 billion in September. The last daily net inflow was reported on October 20, when $1.346 billion rolled in due to foreign payments on a privatized Brazilian asset. On Tuesday in the floating forex market, the real closed unchanged at 1.1950 to the dollar while in the parallel market, the Brazilian currency finished at 1.260, also unchanged from Friday's close. Monday was a national holiday. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9368)	11/3/1998 11:06:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

SEC OKs 11 Telebras (NYSE:TBR) spin-offs for NYSE Reuters, Tuesday, November 03, 1998 at 20:56 The 11 companies include eight cellular companies, Telesp Celular (SAO:TSPP4), Tele Sudeste Celular (SAO:TSEP4), Tele Sul Celular (SAO:TCSL4), Telemig Celular (SAO:TMCP4), Tele Leste Celular (SAO:TLCP4), Tele Centro Oeste Celular (SAO:TCOC4), Tele Nordeste Celular (SAO:TNNEP4) and Tele Norte Celular (SAO:TNCP4). The spin-offs also include three fixed-line companies, Telesp Participacoes (SAO:TSPP4), Tele Centro Sul Participacoes (SAO:TCSP4), and Tele Norte Leste Participacoes (SAO:TNLP4). Embratel is Brazil's international and domestic long-distance company. washington.equities.newsroom@reuters.com)) Copyright 1998, Reuters News Service