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

To: djane who wrote (12284)	1/23/1999 1:57:00 AM
From: djane	Respond to of 22640

** NY Times. Central Bank Tries to Halt Slide of Brazil Currency nytimes.com January 23, 1999 By DIANA JEAN SCHEMO AO PAULO, Brazil -- Faced with another steep fall in the value of its currency, Brazil's central bank used more of its dwindling reserves of dollars Friday to buy Brazilian money in the foreign exchange market. The action helped stabilize the value of the currency, the real. But it did little to calm the nerves of financial analysts and economists who are on edge over the future course of Latin America's largest economy. The main stock market index, the Bovespa, which has become something of a barometer of investor anxiety about Brazil, fell 1.79 percent, its second big decline after four days of large gains. "Confidence in the Brazilian government is at a very low level," said Alexandre Barros, a political consultant based in Brasilia. "Internally, people are asking what are these guys going to do." The central bank's move reined in Brazil's currency at 1.71 reais to the dollar, after it plunged earlier in the day to 1.90 to the dollar. After leaving passage of structural reforms to cut government overspending until his fifth year in office, President Fernando Henrique Cardoso has suddenly run out of time, as the economic storms that battered Asia and Russia now hammer Brazil. Though Brazil's Congress passed an important measure on pension reform Wednesday night, the expectation from financial markets is now that Brazil must take more aggressive action to arrest its economic slide. International investors now expect even deeper spending cuts than the 28 billion reais originally scheduled (now worth $16.5 billion), changes in economic leadership and other more drastic measures. The country is racing to fashion a series of policies that will allow it to lower dizzyingly high interest rates, which most financial observers say the country cannot sustain for more than 90 days. Brazil's foreign reserves have now dwindled to $26 billion, roughly a third of their level last summer. A team from the International Monetary Fund, which is backing Brazil with a $41.5 billion standby loan, Friday headed for talks with officials in the capital of Brasilia. The agreement the fund signed with Brazil just two months ago has been largely superseded by the swift unraveling of Brazil's economy in recent weeks, as interest rates soared and a dangerous hemorrhaging of foreign reserves -- contained by the IMF-led bailout a few months ago -- restarted. With important premises of the original accord not met, the IMF agreement is being reopened for discussion. The agreement presumed Brazil would maintain its policy of linking the currency's value to the dollar, which it abandoned last week. Brazil also failed to meet targets for domestic debt levels in December. Copyright 1999 The New York Times Company

To: djane who wrote (12284)	1/23/1999 2:10:00 AM
From: djane	Read Replies (1) \| Respond to of 22640

Brazil and Latin America. Lipper: Waiting it out may pay off cbs.marketwatch.com By Craig Tolliver CBS MarketWatch Last Update: 5:04 PM ET Jan 22, 1999 Mutual Understanding NEW YORK (CBS.MW) -- Mutual funds focusing on Latin America aren't off to a great start this year. Then again, Latin America-specific mutual funds have had their share of woe since surfacing in 1991. AIM Latin America Growth (GTLAX), the granddaddy of the bunch, is off 22 percent (2.6 percent annualized) since its 1991 inception, according to Lipper Inc., the New York fund tracker. To be sure, that fund did achieve a solid gain of 53 percent in 1992, according to Morningstar. It also saw gains of 17 percent in 1996 and 15 percent in 1997. Every other year, however, witnessed losses, and 1998 was no exception with a tumble of 44 percent. Year-to-date, the fund is already off 21 percent. Much of this is attributable to turmoil surrounding Brazil. As of Sep. 30, nearly 40 percent of the portfolio was invested in Brazil. Mutual fund analyst A. Michael Lipper finds that while the Brazilian crisis may have broader implications than some suspect, it could also be the catalyst for some real value opportunities in the region. He could be right. The Lipper Latin America Fund Index dropped nearly 22 percent for the week ending Thursday, Jan. 14, following news of the devaluation of the Brazilian real. A week later, the index is recovering -- up 8.1 percent as of Thursday. CBS.MarketWatch.com asked Lipper to expand on his observations and outlook for the Brazil, the leading economy in Latin America. Should we fear a Brazilian contagion? Lipper: As usual with all headline crises, it's the secondary and tertiary impacts that are more difficult to spot and can be more dangerous to people's investments. Brazil is a major importer of U.S. goods and services. Brazil is normally the largest country in Latin America for U.S. multinationals with operations there. So, somebody may say, "Gee, I don't have any Brazilian stocks." But (they may) forget they own General Motors (GM) or GE (GE) or Johnson & Johnson (JNJ). So this could have a much broader effect than people realize. Lipper: That's right. People who have stayed away from Latin America-specific mutual funds may not be as out of the water as they might have assumed. Lipper: And places like Citigroup (C) have substantial positions there. See related story. What about Latin America? Good place for bottom-fishing right now? Lipper: I think so. But when you fish in quiet pools, it sometimes takes much longer to get results. Well, longer is right. I'm looking at the Lipper database on Latin American funds, and I'm noticing that for the three-year period, there are only two funds that actually have a positive return. One is Morgan Stanley Dean Witter Latin America (MILAX), which has a 0.6 percent return for three years, and that's an institutional fund. Lipper: Right. Then there's Van Kampen Latin America Class A shares (MSLAX), which is a 0.1 percent return for three years -- and that isn't even load-adjusted. Lipper: That is correct. So if you've been in Latin America specific funds for the past three years, you're losing money. Lipper: You're certainly losing opportunity and probably losing money. However, that does not necessarily mean that you'll do that in the future. If you look at the tremendous social, political, and economic progress that's been made over the last three, five, and 10 years, and you look at the relative youth of the population, I think you can make a very interesting case. And the old image of Latin American lazies – which was never correct – is far from the case. There's a lot of people down there that want to work real hard. Would you advise getting into Latin American funds right now? Is there a signal that investors should be looking for? Lipper: I would advise getting in now, but only a little. What percentage of a portfolio do you think would be wise? Lipper: Well, it depends on the nature of the portfolio. A conservative portfolio, maybe only 1 or 2 percent. A portfolio that is both aggressive and long-term, somewhere between 5 and 10 percent. So, what is your view on emerging markets in general at this point? Lipper: Much the same. I think you're seeing some signs of a turn in Asia. May take a while to work out and this may be a false bottom, but nevertheless I think it's quite attractive. What about the "hot" Russia funds, like Lexington Troika (LETRX), that have taken such an awful beating? Lipper: I have had more difficulty with them, in part because I don't know that the culture will support paying for absentee owners. Any final thoughts on this subject? Lipper: That in a period of high markets, you invest outside of those markets on the presumption that the high market is at worst going to be flat. If the high market goes down, particularly a U.S. market, it's going to bring the others down with it. So, if you're investing outside, your long-term point of view has got to be a long-term point of view. SoapBox airs the views of investors, executives, companies and just plain folks. E-mail your news or opinions and a one-sentence bio to CBS MarketWatch © 1997-1999 MarketWatch.com, Inc. All rights reserved. Disclaimer. MarketWatch.com is a joint venture of CBS and Data Broadcasting Corporation. CBS and the CBS "eye device" are registered trademarks of CBS Inc.

To: djane who wrote (12284)	1/23/1999 2:20:00 AM
From: djane	Read Replies (1) \| Respond to of 22640

World Markets Shaken by Brazil Worries. New Concerns About Asia Add to Investors' Anxiety washingtonpost.com By Paul Blustein Washington Post Staff Writer Saturday, January 23, 1999; Page E01 Global financial markets trembled yesterday amid deepening fears that Brazil was losing its battle to keep investors from fleeing the country. Adding to the jitters was renewed speculation that China and Hong Kong might be forced to devalue their currencies. And underscoring worries that markets worldwide are headed for a fresh bout of instability, a top Japanese Finance Ministry official fretted publicly about "a risk of world financial collapse." Hong Kong's main stock index fell 3.1 percent, South Korea's fell 5.4 percent, Germany's fell 3 percent and Britain's lost 2.7 percent as evidence mounted that Brazil's recent turmoil might worsen and double back to Asia, where the global financial crisis started a year and a half ago. The Dow Jones industrial average shed 143.41 points, or 1.5 percent, to finish at 9120.67, although much of that was attributed to Wall Street's disappointment with International Business Machine Corp.'s fourth-quarter earnings. IBM shares plunged $17.25, to $179.75. One bright spot was Argentina, where the stock market gained 1.1 percent following a government announcement late Thursday that the country was strongly considering a novel plan to eliminate its currency, the peso, in favor of the U.S. dollar. But the tremors in Brazil and Asia raised anew the prospect that the global crisis was taking another nasty turn in which currency and stock market selloffs in one country lead to selloffs in others. When the currency of a major economy slides 30 percent as Brazil's has over the past week and a half, other countries' currencies often follow suit because otherwise, their exports become uncompetitively priced. Brazilian markets did not take a catastrophic hit yesterday; the main stock index fell 1.8 percent. The currency, the real, recovered from a tumble after the central bank intervened for the first time this week to buy reals. The real ended at 1.71 per dollar, down from 1.70 late Thursday. But other troubling signs emerged, notably the government's failure to sell about one-third of the 10-month bills it was offering at auction yesterday because many investors insisted on receiving a yield higher than the maximum 14 percent. And the fact that markets were losing ground for a second day in a row was particularly disturbing because many analysts and government officials had been expecting a rally following a congressional vote Wednesday night approving the most controversial section of the government's budget-cutting plan. The administration of President Fernando Henrique Cardoso had warned that the vote on the bill to cut civil service pension costs would be seen by investors as a critical test of Brazil's ability to tackle its most serious problem -- its massive budget deficit. So the disappointing market response fueled fresh doubts about the effectiveness of the international effort led by the IMF and the Clinton administration to stabilize Brazil's economy. The IMF and the administration lined up a $41.5 billion loan package for Brazil two months ago. "It took me by surprise, I must tell you," said Arturo Porzecanski, chief economist for the Americas at ING Barings, referring to the declines in Brazilian markets yesterday and the day before. "I slept soundly Wednesday night knowing that Congress had finally passed an important measure that had been defeated four times previously, but market sentiment soured [Thursday and Friday], and the situation is really precarious." The IMF and Treasury declined comment. An IMF staff mission that was scheduled to leave for Brazil as early as this weekend has been delayed, a spokesman said, but a Treasury spokesman said that Edwin Truman, the assistant secretary for international affairs, would go to Brazil early next week. The advice from Washington is almost certain to be that Brazil, having been forced by market pressure last week to drop its policy of maintaining a fixed value for the real, now needs to make clear to investors what principles it will follow in conducting monetary policy to keep inflation in check. A number of analysts, including Porzecanski, said that the markets' poor showing was due in part to fears that Brazil might revert to its old practice of printing money with abandon now that it has abandoned the discipline of the fixed-currency approach. "What has happened is a pretty major change in currency regime in a country that has had experience with hyperinflation and monetary mismanagement in the past," said Desmond Lachman, head of emerging markets research at Salomon Smith Barney in New York. "So they need to come out with a new set of rules of the game." The developments in Brazil revived one of the biggest fears of last year's crisis -- the danger that China and Hong Kong might feel compelled to drop their fixed exchange rates, too, starting another cycle of devaluations in Asia. Chinese officials reiterated this week that they will keep their currency stable because it is in China's interest to do so, and many economists agree. But in a sign of growing market pressures, Hong Kong interest rates headed sharply higher yesterday as the government sought to make it expensive for speculators to borrow and place bets that the Hong Kong dollar will fall. In Argentina, meanwhile, the announcement that the government is thinking of "dollarizing" the economy appeared to have insulated the country -- at least yesterday -- from some of the troubles afflicting its giant neighbor. Argentina already keeps the peso tied to the dollar on a rigid basis under a system known as a currency board. So scrapping the peso and making the dollar the country's currency would involve little sacrifice of monetary sovereignty, and it might increase investor confidence. But even if adopted, the plan would take several years to implement, and would pose some serious political and technical difficulties, economists said. In Tokyo, Eisuke Sakakibara, the vice minister for finance, used extraordinarily blunt language in voicing Japanese frustration over turbulence in financial markets. He denounced what he called "market fundamentalism" -- a reference to the freewheeling capitalism favored by Washington -- and criticized the IMF's approach in rescuing Asian economies. "There is a risk of world financial collapse, and that's why it's important to review the global financial architecture," he said. "The one we have right now is inherently unstable." © Copyright 1999 The Washington Post Company

To: djane who wrote (12284)	1/24/1999 8:52:00 AM
From: Alfredo Nova	Read Replies (1) \| Respond to of 22640

To all: I question the validity of all these news sources like CNBC, street.com etc Their interviews to a variety of money managers (who underperform the index in 85% of cases), "investment strategists" (likely the same guys who recommended Telebras at 120), "chief economists" (of what?), result in a endless cacophony (greek term which means confusion of sounds resulting in acoustic chaos, or simply bad sound), which confuses us and prevents us from making good, informed, well thought decisions. I don't see how Unibanco, at these very low levels, with recent good news, could go lower. And the 10% dividend is not bad either. I see value in TSP, Embratel and TCP. One year from now, we shall read that thestreet.com thinks Brazil is a great place to invest. By then, Unibanco could be $20 or more. This said, it is always good to hear all sources and I do not mean to diminish the value of Djane's posting, but just put these reports within a wider context. Finally, Merrill Lynch restated their neutral view on Unibanco after the last esp release. They also had a great report on 1/6 on Latin American Telecom, full of numbers in well organized tables, which I have not yet had time to look at carefully. best regards, Alfredo