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

To: Worswick who wrote (12293)	1/23/1999 3:21:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Worswick, Brazil is down 50% from the highs. Could get better or worse short term dependent on the currency and the factors driving it. Once it stabilizes, hopefully fundamentals into play, if not before. Brazil looks to be the cheapest market in the world already. One other point, on the surface it looks to me that Brazil has much greater international support. They know what their problems are and political support on the surface has appeared to grow significantly in the year and a half I've been watching this country. They do not appear to be in a state of denial as well as political wrangling as much of Asia until recently. I still like to think Brazil is not Asia and not Russia. Hope I'm not wrong. sf

To: Worswick who wrote (12293)	1/23/1999 3:52:00 PM
From: Tony van Werkhooven	Read Replies (2) \| Respond to of 22640

Clark- your suggestion is a good one, that I have brought up previously. It should be noted however that the underlying dynamics are very different: Relative differences: 1. There is no over-capacity problem 2. The banking system is generally in good shape 3. There never was an excessive inflow of short term dollar denominated debt 4. High level of consumption Again, the above are relative differences, which will be impacted by devaluation, high interest rates, and recession. Brazil has had very large government deficits generated by excessive employment in the government sector and overly generous (this is a kind description) benefit plans. The devaluation in and of itself does not address this problem- which is a political problem which the government has been trying to address for some years. Hence, denial at the government level is not an issue. An overly complex legislative environment has made adjustment in this area impossible for the past years. Clark- I think all of us on this thread would be most appreciative of any observations you might have. The asian model, with its depth and length, is scary. I am not convinced however that Brazil would follow this model. Tony