By JENNIFER L. RICH

          SÃO PAULO, Brazil, April 27 -- With the Nasdaq oscillating
          sharply this month, Latin America's two principal markets, the
          Bovespa of Brazil and the Bolsa of Mexico, have gone along for the ride.

          Emerging markets have always been buffeted by instability in the United
          States as anxious investors pull out of what are considered high-risk
          positions elsewhere. But because Latin American markets have been
          dominated by brick-and-mortar companies, they have usually been
          linked to the Dow, not the technology-heavy Nasdaq. This new
          relationship has confounded investors, particularly now that the Brazilian
          and Mexican economies are booming.

          Since the beginning of the Nasdaq swing, the Bovespa index has
          dropped to 15,440, after rising to a high of 19,046 in March. In Mexico,
          the Bolsa index has fallen to 6,844, from a high of 8,417, also in March.
          Some of the current downward pressure can be directly linked to the
          market in the United States.

          "It was Nasdaq euphoria that fueled the markets in the fourth quarter,"
          said David Chon, Latin America equity strategist for Bear, Stearns.
          "After running up significantly, some of the froth is now coming off of the
          telecom-media-technology sectors."

          Indeed, the telecommunications sector, which makes up about 50
          percent of the Bovespa, has led Brazil's downward trend. The shares of
          CRT Cellular, for example, which is controlled by Telefónica de
          España, fell from a high of 899 reais ($499.20) in March, to 609 reais at
          today's close. CRT is one of the cellular companies in Brazil that plans to
          start wireless Internet services by June.

          "The telecom companies are all earning revenue from the Internet," said
          Julio Zeigelmann, director of equity funds at BankBoston Asset
          Management in São Paulo. "It makes sense that decreasing optimism in
          the Internet would affect us locally." In Mexico, Teléfonos de Mexico has
          also taken a hit, closing today at 28.4 pesos (3.01), 22 percent below its
          52-week high of 36.2 pesos on March 7.

          But since technology is still a nascent industry in Latin America, most
          companies -- including telecommunications concerns, which are still
          trying to meet demand for regular fixed-line service -- are still squarely
          part of the traditional economy. That makes for a tenuous connection
          between Latin American stocks and the Nasdaq.

          "This correlation doesn't have much logic," said Octavio de Barros, chief
          economist of BBV Argentaría in São Paulo. "When the market realizes
          that the Bovespa is not linked to the Nasdaq, we could have a rally."

          Many companies in Latin America, and particularly in Brazil, are
          undervalued now that stock prices have fallen, with many trading below
          book value, according to many analysts. They say that the flight to quality
          that normally occurs during market turbulence should reverse once the
          value of Latin American stocks becomes widely known.

          Quarterly reports released this week have also animated investors. On
          Tuesday, for example, the Mexican cement company Cemex announced
          that operating profit rose 22 percent in the first quarter compared with
          the 1999 quarter, beating analyst's expectations. The positive news
          follows impressive results announced last week by the Brazilian steel
          company CVRD, which increased profits 98 percent in the first quarter
          over the comparable period last year.

          The earnings reports followed positive economic news coming out of
          Latin America. Since the Russian debt crisis in 1998 sent investors
          running from Latin America and forced Brazil to devalue its currency, the
          region has had a quick recovery. Latin America is expected to grow 3.7
          percent this year, up from 0.2 percent last year, according to estimates
          from ING Barings.

          Inflation has also shown some decline this year. The region should finish
          the year with inflation at 6 to 8 percent, compared with 8.8 percent last
          year. The International Monetary Fund recently revised its inflation target
          for Latin America this year to 7.7 percent from 8.4 percent on strong
          economic activity coming out of the region.

          Brazil's Congress also recently passed important legislation, the Fiscal
          Responsibility Law, which establishes austere spending and indebtedness
          limits for the local, state and federal governments. The Brazilian
          government has been battling large deficits for years, and indebtedness
          was a primary cause of investor uncertainty in the devaluation last year.

          The budget deficit now stands at 3.6 percent of the country's gross
          domestic product, but with the new law and the economic recovery, the
          government expects the deficit to fall to about 2 percent of G.D.P. in
          2001.

          In Mexico, investment activity, which has been strong this year because
          of ties to the United States through the North American Free Trade
          Agreement, is expected to slow before the presidential election
          scheduled on July 2.