|
Brutal day for Bovespa
|
 |
December 3, 1998: 4:38 p.m. ET
Brazilian stocks plummet on pension vote, dragging down region's bolsas
|
NEW YORK (CNNfn) - Stock prices got battered throughout Latin America Thursday as a failed attempt to reform Brazil's ailing pension system drove international investors from emerging markets.
In Brazil, the blue-chip Bovespa index plunged as much as 9.7 percent at one point upon news the lower Congressional house rejected a key government initiative, delaying the country's social-security reform plans until next year.
By day's end, the Bovespa closed off 742 points, or 8.8 percent, at 7,706 points amid heavy trading.
The initiative's defeat was the first major blow to the government's fiscal adjustment plan and could signal increasing opposition ahead of other key votes.
Analysts said the vote would delay an overhaul of the nation's bloated social-security system until 1999, striking a major blow against overseas investors' confidence in the beleaguered Brazilian economy.
"The government defeat yesterday in the lower house hit the bolsa like a bomb today," a trader at a local brokerage said. "The only reason the index didn't fall more is because Europe decided to cut interest rates."
Eletrobras preferred led declining shares with a 13.2 percent drop to 28.20 reais. Telebras preferred receipts ended off 9.2 percent at 102.20 reais.
The vote also cleared overseas capital out of other Latin markets as only sellers remained on thinly populated trading floors.
Mexican stocks extended early losses in late trade on Thursday in step with region-wide jitters about Brazil, dealers said.
The benchmark IPC index closed down near its low for the day, off 115.20 points, or 3.02 percent, to 3,700.19.
"The strong decline in Brazil is affecting all the Latin American markets, including Mexico which is ignoring the Dow Jones," said one floor trader.
Elsewhere in Latin America, Chile's IGPA index shed 72.51 points, 1.90 percent, to 3,748.94.
Stocks in Peru took a beating, tumbling 70.86 points, or 4.59 percent, to 1,473.70 on Lima's General Index.
Argentine stocks sharply extended their losses by the close of trade, demonstrating trader fears that trouble in the Brazilian economy -- inextricably linked to Argentina -- could spread.
The key Merval index tumbled 31.76 points, or 6.55 percent, to 453.120.
"The market is very delicate at the moment and very nervous," said trader Julian Cohen. "As always, we're following everyone else lower."
And, after a morning spent fighting the Latin trend, Venezuelan stocks ceded ground late in the session as traders gathered their gains ahead of Sunday's hotly contested presidential election.
By the close of trade, the benchmark IBC index had fallen 15.37 points, or 0.38 percent, to 4,062.51.
"Many investors are pulling out of the market and taking their profits ahead of the elections, afraid of what might happen," said Gonzalo Machado, a broker with Americal.
But the woes of the region's largest economy were not far from investor's minds, according to Reinaldo Uribe, with Exterior brokerage, "The market was also hit by a fall in Brazil." 
-- from staff and wire reports
|
|
|
|
|
 |
|
