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Brazil leads Latins higher
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January 20, 1999: 4:54 p.m. ET
Bovespa traders bet on pension bill passage; regional markets sigh in relief
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NEW YORK (CNNfn) - After a week of extreme volatility spurred by fears over the fate of the Brazilian currency, Latin stock markets returned to business as usual Wednesday with comparatively moderate gains.
Brazilian stocks led the advance, closing nearly 43 percent higher as investors pinned their hopes on a key anti-crisis measure currently facing Congress.
The market's blue-chip Bovespa index finished up 294 points, 3.98 percent, at 7,674 on substantial turnover of about $412 million.
The market's benchmark stock, Telebras (TBH) preferred, added 2.47 percent to 112 reals.
"A good outlook on the vote gave the market a kick because investors remembered how much the market had lost right after this same bill was rejected in December," said Roque Sut Ribeiro, fund manager at Banco Marka in Rio de Janeiro.
Investors expect the lower house to approve a controversial pension reform bill that would change the way retired civil servants receive social security payments.
The infamous bill, which had already been turned down by the house four times, represents a crucial part of the government's fiscal austerity package. If passed, it could add 28 billion reals ($18 billion) to government coffers this year.
Brazil's stock market plunged in December after the bill was rejected most recently, triggering more dollar outflows from the country's currency markets and eventually leading to a devaluation of the local currency.
"Everybody knows today's vote is crucial for Brazil to restore investor confidence," said one local trader.
Brazilian stocks have rallied every day since the government floated the currency last Friday, a move that has so far resulted in the real losing 24 percent of its pre-float value.
After dogging the Brazilian market's every tremor for days, Argentine stocks fell out of step, tapering their recent advance to climb only 0.10 point, or 0.40 percent, to 380.95.
Chilean and Peruvian shares enjoyed much less sedate gains. The Chilean market ended up 43.16 points, or 1.29 percent, at 3,391.71, while Peruvian stocks likewise added 25.02 points, or 1.91 percent, to end at 1,331.74.
Mexican stocks extended an early rally to end up 4.77 percent as local traders hoped U.S. stocks were on the verge of recovering their balance.
"If you take a look, the time when it (the Dow) begins to bounce back is when the Mexican market begins to pick up strength," a desk trader said.
The leading IPC share index gained 171.98 points to close at 3,775.41.
Dealers said early strong gains by the peso encouraged Wall Street investors to buy American depositary receipts of Mexican companies.
"This peso strength, especially in the early hours, lent itself to arbitrage trading," one dealer said.
Heavyweight Telefonos de Mexico (TMX) saw its ADRs climb 2-1/16 to 50-1/16, while local shares rose 1.10 pesos to 25.65.
Venezuelan shares were steady as investors sat on their hands in the limbo period before the new government takes office in 12 days.
The IBC index edged up 13.74 points, 0.34 percent, to close at 4,063.45.
Reinaldo Uribe, a trader at Exterior, said investors were holding back until the government of Hugo Chavez takes office Feb. 2. 
-- from staff and wire reports
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