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

To: Tony van Werkhooven who wrote (12193)	1/21/1999 6:20:00 PM
From: Steve Fancy	Respond to of 22640

Ah Tony, ya listen to all these guys and you'd think all stocks in Brazil are going to 0. I did hear one analyst today suggest now is the time to buy. Who knows, but I believe this will be short lived. Whatever's going to happen will happen fast. Seems it's the nature of markets these days. If the real is going to go to 2, it'll likely happen in the next week...the herd mentality at work. Within the next 30 days or so, we'll have a real good feel for the fiscal package and I think the real will stabilize somewhere. In the meantime sounds like TBH is going down further...I did pick up some more of those TBHNM's at the end of the day. Any further Brail buying, I'll wait till if and when we hit the lows of the last couple weeks, then I'll buy again at the lows of last year (46 on TBH). Something tells me it ain't gonna get that bad. Sounds like big sell-off possible in US markets tomorrow...I'll be watching CPQ who I think will have big news next week. Also watching a handful of others for put selling opportunities. sf

To: Tony van Werkhooven who wrote (12193)	1/21/1999 6:31:00 PM
From: Steve Fancy	Respond to of 22640

Brazil says no new economic plan or currency board Reuters, Thursday, January 21, 1999 at 16:40 BRASILIA, Jan 21 (Reuters) - Brazil's presidential spokesman on Thursday denied rumors the government was going to introduce a currency board and said there were no plans to replace the inflation-taming Real Plan. Presidential spokesman Georges Lamaziere told a news briefing there was no truth in the rumors of a change in economic policy after the currency, the real, was allowed to float last week. "The adjustments that had to be made have already been made," he said. "There won't be a currency board, there is no truth to this rumor." He said President Fernando Henrique Cardoso, the mastermind behind the Real Plan, had himself opted to abandon gradual, controlled devaluation against the dollar within a mini-band for the free flotation of the real and the Central Bank had been very clear about the new monetary policy. "The president, through me, is saying that there will not be any modification that hasn't been decided recently, that there will not be a currency board," Lamaziere said. The Central Bank announced Monday that it would not intervene in the foreign exchange market to defend the real, letting the currency float freely for the first time since the introduction of the Real Plan in 1994. The real, which has lost nearly 30 percent of its value since last Tuesday, swung wildly against the dollar on Thursday amid concerns the capital flight was draining the market's dollar stocks. Lamaziere refused to comment on the level the government was prepared to allow the real to sink to against the dollar, saying that it was up to the Central Bank. In the commercial forex market, the real closed 7.6 percent weaker at 1.76 to the dollar. Copyright 1999, Reuters News Service

To: Tony van Werkhooven who wrote (12193)	1/21/1999 6:33:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shares end down 4.6 pct as the real weakens Reuters, Thursday, January 21, 1999 at 16:28 SAO PAULO, Jan 21 (Reuters) - Brazilian stocks ended down 4.6 percent Thursday as the local currency weakened 7.6 percent amid a persistent wave of dollar outflows, even though the government's austerity package had cleared a crucial hurdle in Congress, traders said. Equity prices also came under fire amid speculation that investment funds faced potential difficulties after high-risk derivative funds run by Banco Boavista Interatlantico posted huge losses in the wake of last week's devaluation of the real, they said. Sao Paulo's blue-chip Bovespa index (INDEX:$BVSP.X) closed at 7,321 points. Shares were ripe for profit-taking, having risen 13 percent in January as of Wednesday's close, traders added. "There were a number of reasons behind today's falls, one being the currency's weakness," said a trader at Solidus brokerage. "Talk that some other banks or funds may be in trouble after betting heavily on the currency and interest rates before the devaluation also frightened some investors." The real dropped on Thursday amid concern that a daily net dollar outflow exceeding $300 million from the currency market was drying up inventories of the U.S. currency held by private banks. Dollars have grown scarcer in foreign exchange markets since the Central Bank allowed the real to float freely last week, ending its regular intervention with dollar sales when the real came under pressure. Copyright 1999, Reuters News Service

To: Tony van Werkhooven who wrote (12193)	1/21/1999 6:34:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil says it will honor foreign debt obligations Reuters, Thursday, January 21, 1999 at 16:16 BRASILIA, Jan 21 (Reuters) - Crisis-torn Brazil will honor its foreign debt obligations, including upcoming Eurobond payments owed by rebel Minas Gerais state, the Finance Ministry said Thursday. The ministry also said in a statement that it would take the necessary legal measures to ensure the country's states upheld agreements to pay their debts to the federal government.

To: Tony van Werkhooven who wrote (12193)	1/21/1999 6:35:00 PM
From: Steve Fancy	Respond to of 22640

IMF says Argentina dollar plan "interesting idea" Reuters, Thursday, January 21, 1999 at 18:18 WASHINGTON, Jan 21 (Reuters) - The International Monetary Fund said on Thursday a proposal by Argentina's central bank to establish a "monetary association" with the United States was "interesting" but denied it had any direct involvement in it. "It's an interesting idea but the IMF has no direct involvement in it," an IMF spokesman told Reuters. washington.economic.newsroom@reuters.com)) Copyright 1999, Reuters News Service

To: Tony van Werkhooven who wrote (12193)	1/21/1999 9:28:00 PM
From: KonKilo	Read Replies (1) \| Respond to of 22640

TBR: I had a 3/16 limit buy in for most of the day but it didn't fill.

To: Tony van Werkhooven who wrote (12193)	1/22/1999 1:53:00 AM
From: Steve Fancy	Respond to of 22640

Tony, Armin...what do you guys think of the UBB numbers? Thanks. sf

To: Tony van Werkhooven who wrote (12193)	1/22/1999 2:08:00 AM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Global Stock Funds Shun Brazilian Shares Managers Still Concerned About Economy By PAMELA DRUCKERMAN and JONATHAN FRIEDLAND Staff Reporters of THE WALL STREET JOURNAL With Brazil's long-feared devaluation now past, and shares there cheap by most measures, are global stock funds ready to plunge back into Brazil? Not quite. Managers of the massive foreign stock portfolios say they are avoiding Brazilian shares until the full impact of the devaluation is felt. Many fear inflation, continued high interest rates and a deepening recession. They want to see the currency stabilize and watch the government make good on a series of promised spending cuts. "We're not going to rush in; we're going to wait," says Travis Selmier, who co-manages $845 million in foreign funds for USAA Investment Management Co., San Antonio. Though they aren't buying Brazilian stocks, global managers are certainly following the market. Some can recite the exact tally of recent spending-cut votes in the Brazilian Congress, and know precisely where the country's newly floating currency, the real, is trading. If global funds finally move back into Brazil, they are sure to affect Brazilian stocks. Together, global and international funds have $346 billion in assets, according to AMG Data Services, by far the largest pool of U.S. mutual-fund money invested abroad. The funds have been shedding emerging-market stocks for months, and had negligible stakes in Brazilian shares when the country first devalued its currency last week. Strong Concerns Remain Even distressed-asset specialists aren't convinced Brazil is a buy. Francois Gour, manager of Waterford Partners LLC's Global Stabilization & Recovery Fund, fears a weakened real could prompt Brazil to renege on its mountain of domestic debt. The currency's drop to 1.70 reals to the dollar Thursday from 1.58 reals didn't ease concerns, since it eats into dollar-denominated gains. Even Brazilian shares listed in New York are adjusted for currency moves. "We're not convinced the worst is over in Brazil," Mr. Gour said. "The danger is that if you plunge in too quickly, then you really have no dry powder left." Many managers would like to see share prices drop again. Brazil's benchmark index surged 31.8% in local-currency terms since a week ago Wednesday in relief that Brazil would stop spending foreign reserves to defend its currency. USAA's Mr. Selmier says he would buy more shares of Banespa, Sao Paulo's state bank, if its stock price fell to about $22, converted from reals, from Thursday's close of $25.90. On a long-scheduled trip to Brazil next week, the manager plans to meet with officials from Big Board-traded food retailer Pao de Acucar, Bahia state power company Coelb and construction firm Odebrecht SA. Most managers are closely tracking shares of the former Telebras phone system, which split into 12 separate American depositary receipts in November but are also listed as a single basket stock. Mr. Selmier says he would buy the basket, which trades under the symbol TBH, if it dropped back to the $50 range. It closed Thursday at $67.50. Not at Any Price Other managers aren't interested in Brazilian shares at any price, and are mystified by the market's buoyant response to the devaluation. "I fail to see what the world is reacting to," said Miren Etcheverry, global manager at John Hancock Funds, Boston. "A Brazilian devaluation is bad for Brazil, short term. And it does not make it a particularly attractive investment opportunity in the near term." But even Ms. Etcheverry hasn't completely banished Latin America from her portfolio. Her fund has shares in Spanish utilities Telefonica de Espana SA and Endesa SA, which own big stakes in Latin utilities. Until Brazil gets back on its feet, none of the Latin markets is likely to take off. Many fund managers say valuations will likely remain depressed until confidence builds in the Brazilian Congress' commitment to reform and then, in a typical herd pattern, investors will start to jump into the most liquid available investments. In Mexico, that means Brady bonds and big-cap stocks like Telefonos de Mexico SA and Grupo Televisa, while in Argentina, big stocks like Telefonica de Argentina SA are favored. Jerry Mill, president of Mill Asset Management Inc. in Littleton, Colo., believes the sums eventually committed won't be as big as those invested in Latin America prior to the bout of emerging-market turbulence that began last summer. "So many investors were burned in Latin America, they don't want to come here anymore," he explains. "My clients ask me: 'Why are you investing in Mexican banks instead of Sun Microsystems?' Frankly, it is a hard question to answer."

To: Tony van Werkhooven who wrote (12193)	1/22/1999 2:14:00 AM
From: Steve Fancy	Respond to of 22640

Foreign Investors/Brazil -3: Real Yet To See Overshoot Dow Jones Newswires Moreover, fears that Brazil's problems might spread to other emerging markets were fanned Thursday. The day saw markets roiled by the revival of an unconfirmed rumor that China is looking to devalue its currency, the yuan, and a report from Goldman Sachs downgrading banks throughout Latin America due to their vulnerability to Brazil's crisis. Global contagion could propel the real into a spiral of competitive depreciations. Such concerns weigh on the currency. But what may best explain the real's fall Thursday is the view among foreign exchange traders that as a newly floated currency, it is yet to find a comfort zone. Many believe the currency hasn't yet experienced the inevitable "overshoot," the sharp fall to the bottom of a trading range that many currencies undergo when they are first floated. The fact that Brazilian stocks rallied 33% the day the real was floated, may have lent some artificial support to the currency, they say. Now that the Sao Paulo stock market has corrected - the Bovespa index is down 4.57% at 1900 GMT Thursday - it may be signal for the real to test new lows. "I had always thought that around a 30% real devaluation was needed," said Henry Willmore, senior economist with Barclays Capital in New York. "There needs to be an adjustment for inflation and that's why there has to be an overshoot." "I think that the BRR1.60 to BRR1.70 range would incorporate a modest amount of overshooting. But it seems the market was a little too optimistic in that BRR1.40 to BRR1.60 range," Willmore said. "Last year (during the Russian financial crisis), people seemed to be over-reacting. This year, people aren't taking it seriously enough. Brazil really does have big debt problems." Frank Gong, global currency strategist with BankAmerica in Hong Kong, says Thailand's experience after the Thai baht's effective devaluation should provide some pointers for Brazilian markets. Gong noted that the Stock Exchange of Thailand index rose 50% in the three days after devaluation, before it subsequently plunged. Similarly, in Brazil, he argues, "soon the market will start to trade on the recession scenario. I think the Brazilian stock market and the real will go down from here, and interest rates will go up first before dropping." -By Michael Casey; 201-938-4384 -michael-j.casey@cor.dowjones.com) -James Areddy in Hong Kong contributed to this article.