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

To: Tony van Werkhooven who wrote (11346)	1/10/1999 12:06:00 AM
From: Alfredo Nova	Read Replies (1) \| Respond to of 22640

To all: I am new to the thread, but have been following Unibanco for several mos. As you know, DLj has a top pick rating on it, the target is 37. Morgan Stanley also likes it (story on Barron's). This latest story seems to recall similar considerations without really adding anything new. Mrt Herro's target of 55 seems a bit generous. I would expect the Brazilian stocks will go lower before they go higher. In saying this, I have already bought a lot of UBB at 14.5-15. I did buy a lot of SKM (Mr Herro talks about Korea) in December 97 at 5.75, I sold it too soon at 8. Learning my lessons how to be more patient. I do not think Korea and Brazil are exactly alike, though. Korea's situation was horrible a year ago, however Korea had strong manufacturing presence in cars, steel , electronics, semiconductors, telecom, energy. Brazil has nothing of this. Both are emerging markets, but Korea is a manufacturing powerhouse. In addition, the Korean won was very low at the time. I would like to know from anybody, if possible, the trading range of the real against the dollar in the last 3 years. It would be reassuring if the real was low as the Brazilian stock index is now. The devaluation may be avoided if the IMF 41 billions was timely and if the government will do the right thing. Still, we will have rocking months ahead. UBB may go down to 10-12 before it starts moving. I agree that the Latin American region should resume growth in the years to come. 3-5 years from now, UBB may be back at 45. Interestingly, Merrill LYnch has all Brazilian stocks rated D, their highest in risk. Value is good, but value without risk is better. Unibanco is a situation of excellent value at this point, with substantial macroeconomic risk and currency risk. The 0.6 book value looks beautiful, but if Brazil devalues, the book value devalues too, so UBB will be 1.0 book value or higher. I hope that the Asian crisis served as a lessons for the emerging economies and for the US and Europe, for the importance of fiscal conservatism and for the need of a concerted action to avoid disaster. The US is no island and a global depression will destroy earnings of S&P 500 companies if nobody in Asia or Latin America can afford to buy goods. Being Italian, I think how Europe will do and I agree with Mr Herro when he says that Europe will face strong competition from Asia when it recovers. Back to Brazil, it would be helpful for everybody if Latin America would start thinking towards a common currency as well. I wish the very likable Brazilian people to do well and return to stability and growth. When that happens, we will make money in Unibanco. Investing in Unibanco, we are helping (in a infinitesimal amount) to bring stability to the region. The Brazilians bring happiness to the world and deserve happiness, and they surely are incredible soccer players... ciao, Alfredo