Brazil stocks rally, real up on government measures
RIO DE JANEIRO, Brazil (Reuters) --Brazilian stocks rallied over 2 percent
and the real currency closed slightly higher Friday on the coattails of new
measures to break the real currency's dive and soften its impact on
Traders said telecommunications stocks posted significant gains thanks
to a return
of some foreign investors for bargain-hunting when the market started to rise. Some
electric utilities with big dollar-denominated debts were particularly favored by the
government's measures, traders noted.
"The Securities Commission's decision has helped a great deal, although
is still analyzing to what extent it will help corporate results," said Herminio Lucci,
head of stocks at Fator Doria Atherino.
"Foreigners started snapping up telecommunication firms, especially
The Sao Paulo Stock Exchange's benchmark Bovespa index finished 2.22
higher at 10,635, in a continuation of Thursday's nearly 4 percent rally, which came
after the measures were announced Thursday. the turnover of 560 million reais was
above average for the past few weeks.
The real currency finished at 2.671 per dollar, slightly stronger compared
Thursday's close of 2.675. It then got a leg up from new Central Bank mechanisms
to reduce the cash banks have at their disposal to buy dollars.
Brazil's CVM securities commission reinstated an accounting mechanism
one used during Brazil's 1999 currency devaluation which allows firms to spread the
impact of the real's sharp depreciation over four years.
It should improve the results of firms which have suffered as their
dollar debts or
costs were magnified in local terms.
"The Central bank have managed to throw the brakes on bearish market
operations," said Bruno Otero of Santander Bank. "The effect for companies with
big dollar debt is sensational."
Traders said the upward trend could continue next week if there were
no big U.S.
military action in the Middle East.
The global economic uncertainty stemming from the devastating Sept.
attacks on the United States added more pressure on the already-pummeled Brazilian
markets as investors sold reais and stocks to protect themselves from an expected
emerging market sell-off.
Brazilian markets have been long hammered by concerns about the impact
U.S. economic slowdown, Argentina's economic crisis, and energy rationing and
higher rates at home.
Tele Centro Oeste Celular mobile phone firm was one of the day's main
closing 8.15 percent higher at
Cable TV and Internet play Globo Cabo lost 2.94 percent to 66 centavos
profit-taking after a week of steady recovery.
Copyright 2001 Reuters.