The Miami Herald
January 18, 1999

             By JAKE KEAVENY
             Bloomberg News

             BUENOS AIRES -- Francois Gour makes his living at Waterford Partners
             assessing when economies have hit rock bottom. By Gour's account, Brazil still
             isn't there.

             The $15 million New York-based hedge fund has a taste for pinpointing market
             lows, being one of the first to buy Asian countries that were socked more than a
             year ago.

             A manager at the $15 million fund, Gour has been studying Brazilian companies for
             months. He plans to buy shares in cellular companies Celular Sul Participacoes
             SA, Telemig Celular Participacoes SA and Telesp Celular Participacoes SA, but
             not until the stock market sinks to its low.

             On Friday, the benchmark Bovespa index in Sao Paulo surged 23 percent in
             dollar terms, a rebound sparked by the government's decision to let the country's
             currency float. The move led the real to plunge 8 percent to 1.43 to the dollar,
             though the stock market rally seemed to spell an end to Brazil's woes.

             ``It's sort of a relief rally,'' said Richard Svartman, a bond trader at Banco Fonte
             Cindam SA. ``It's a feeling of `nothing can get any worse.'''

             For Gour, though, the country's not out of the woods yet. He may be worth
             listening to.

             As a so called ``opportunity investor,'' he represents a group that -- at least the
             ones that have done their job correctly -- were the first to buy into countries such
             as South Korea, Thailand, the Philippines and Indonesia during the past year.
             These markets have rebounded at least 40 percent, and some have doubled, from
             their lows.

             ``I've watched about 10 blow-ups like this and the worst never ends with the
             devaluation,'' said Gour.

             Gour hailed the decision to float the real -- which stemmed massive outflows of
             foreign reserves -- but points out there's still the question of a swelling budget and
             trade gaps, high interest rates and a lack of credit. After all, economists at firms
             like SG Cowen and Banco Santander SA now expect Brazil's 1999 economy to
             retract by 1.5 to 5 percent.

             Flowing from Latin America

             To be sure, calling Brazil risky at this point isn't anything novel.

             Investors have been flowing out of Latin America for the past year, which picked
             up in recent weeks. Even with Friday's gain, the benchmark Bovespa stock index
             has dropped 15 percent this year. And that falls on top of a 40 percent plunge in

             Bonds also have been battered, probably the best indication of investor perception
             of risk. The benchmark ``C'' bond, the country's most traded bond, is down
             one-fourth to 56.25 in the last year, yielding 17.22 percent, or 12.53 percentage
             points more than similar U.S. Treasuries.

             But Gour is actually bullish on Brazil, and eagerly waiting to go in. He purchased
             shares in Telemig and Celular Sul equal to 2 percent of his portfolio last November
             and December. And he hopes to build that position to about 10 percent in the
             ``coming weeks or months.''

             While Waterford doesn't represent a wall of cash that can turn Brazil around
             overnight, money waiting to buy Brazil isn't restricted to small U.S. hedge funds

             Brent Woods, a partner at San Diego-based Brandes Investment Partners, a
             private money manager with $25 billion in assets, said he's studying Brazilian
             energy utilities, telecommunications companies and banks for potential buys.

             Neil George, who helps manage $12.5 billion at Guinness Flight Investment
             Management, and who sold his Brazil investments last year, is ready to consider
             buying Petrobras SA and Telesp.

             ``There'll definitely be opportunity for value,'' said Brandes' Woods. ``We'll just
             have to watch and wait for the right time.''
             How do you define what's cheap?

             The question then is, where is the bottom? And when the future of the economy is
             still rocky, how do you define what's cheap.

             Gour's waiting for several developments. First the government needs to define its
             new currency exchange regime, which it plans to announce today. That's widely
             thought to be either a free-floating system, or a fixed currency board like in

             More importantly will be when and if Brazil's congress approves a series of tax
             increases and budget cuts aimed at slashing its $60 billion budget deficit by close
             to half.

             That will help determine how fast interest rates fall, and access to credit returns,
             allowing companies to repay their debts, begin investing again, and help dig the
             economy out of its hole.

             The most attractive industries in Brazil are telecommunications services or electric
             and gas utilities, said Woods. People will still make telephone calls and use power
             in a recession. Looking for companies with a strong balance sheet and little foreign
             debt exposure will help survive a devaluation.

             Within those parameters, there's no question shares are relatively cheap, said

             Take Telemig, the cellular company in Minas Gerais, Brazil's second largest state.
             Looking at one measure, company's enterprise value -- market capitalization plus
             debt -- divided by sales, Telemig is just 0.6. That's well below the average of 2.0
             for a basket of emerging-market cellular companies used by Waterford, and 4.0
             for a basket of cellular companies in developed countries like the U.S. and

             The same measure for Telesp Cellular, in the Brazilian state of Sao Paulo, is 1.0,
             while Tele Celular Sul in southern Brazil is 0.8.

             Market activity

             In Latin American markets last week, despite a region-wide rally sparked by
             Brazil on Friday, regional indexes fell for the week. Brazil, Colombia, Chile,
             Venezuela and Argentina were among the world's top 10 worst performers.

              Brazil's Bovespa index declined 16 percent to 6746.7. Shares in Aracruz
             Celulose SA, which earns dollars from its exports of wood pulp, yet pays for
             production in reais, soared 43.8 percent to 1.84 reais on Friday. Cia. Vale do Rio
             Doce SA, an iron ore exporter, rose 47 percent to 24.97.

              The Mexico bolsa index fell 4.5 percent for the week to 3617.77. Banks such as
             Mexico's Grupo Financiero Bancomer surged Friday as pressure on regional
             currencies eased and interest rates fell. Bancomer gained 25 percent to 1.75
             pesos, and the Mexican peso surged 3.8 percent to 10.23 to the dollar, its biggest
             gain since March 10, 1995.

              Chilean shares on Friday surged on optimism the central bank may cut interest
             rates. Banco Edwards SA shares gained 3.9 percent to 27 pesos, while the
             selective index fell 12 percent to 89.72.

              The General index in Caracas, Venezuela declined 11 percent to 4179.39. CA
             Nacional Telefonos de Venezuela led a rally on Friday, gaining 4.7 percent to
             1,265 bolivars and 8.9 percent to 16 1/16 in New York.

              And in Argentina, the Merval index fell 11 percent to 382.37, led by such bank
             shares as Banco de Galicia y Buenos Aires SA and Banco Frances SA on Friday.
             Galicia shares rose 16.9 percent to 3.22 pesos, Frances rose 21.5 percent to
             5.855 and Banco Bansud SA rose 13.7 percent to 3.082

              The IBB index in Bogota, Colombia fell 11 percent for the week, as brewer
             Bavaria SA gained 3.1 percent to 6,700 pesos on Friday.

              For the week, Peru's general index fell 4.1 percent to 1315.7. Telefonica del
             Peru SA gained 10.1 percent to 3.92 soles and 10.3 percent to $12 in New York
             on Friday.

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