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Latin markets mixed
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November 19, 1998: 5:34 p.m. ET
Profit-seekers knock Brazil and Mexico, but rest of region's stocks rise
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NEW YORK (CNNfn) - Without a definitive lead from a lackluster Wall Street Thursday, and domestic debate over economic matters, two of Latin America's most-watched bolsas, Brazil and Mexico, were hit by investors seeking profits.
Most of the exchanges in the rest of the region, however, added significant gains to their leading stock indexes on the back of political optimism, a positive performance in the Asian markets and other factors. Venezuela led the way, with a 2.3 percent rise on its IBC index, followed by 1 to 2 percent gains on the bolsas in Argentina, Chile and Peru.
Scandal, profits knock Bovespa
Brazilian shares slumped at the close on Thursday after several days of gains took hold amid a political scandal, traders said.
The market had traded with an eye on the Senate testimony of Communications Minister Luiz Carlos Mendonca de Barros, who denied allegations he had sought to influence the outcome of the privatization of telecoms firm Telebras.
The Bovespa index of leading shares closed down 229 points, or 2.68 percent, at 8,318 with 610 million reais volume.
"The minister's deposition won't change the timetable of reforms in Congress, which is what is interesting to the market," an analyst said referring to the government's austerity proposals being debated in Congress.
Brazil's real currency also fared poorly as an estimated $235 million fled the country, awakening fears that the staggering capital outflows of the summer and early fall might be returning.
Although the real only weakened 0.04 percent against the dollar to fix at 1.1935, traders said a trickle of selling deepened into a noticeable current of small trades near the end of the session.
Capital flight topped $30 billion in August and September, draining reserves and putting pressure on the central government to devalue its currency and enact sweeping fiscal reforms.
Budget batters Mexico's bolsa
Mexican stocks sagged in late trade on Thursday as an early agreement seemed less likely on budget proposals for 1999 and on a long-running wrangle over a multibillion-dollar bank bailout, dealers said.
"The markets are seeing that opposition to tax hikes is very strong. Practically all sectors of society are opposed to the budget," said Roberto Galvan, an analyst at Bursametrica Management.
The bolsa's decline began in early afternoon when profit-seekers came out in force.
The 35-stock IPC index fell 63.62 points, 1.57 percent, to close at 3,995.62, well off an early high of 4,105.05.
The Mexican government announced late Wednesday it was considering raising highway tolls by 15 percent in 1999, a move coming after an austere and controversial budget bill was unveiled last Friday.
Dealers said they were also disappointed over a bill tabled by the conservative PAN opposition party that they said made an early deal unlikely on the months-old wrangle over the $65-billion Fobaproa bank bailout.
New alliance buoys Caracas stocks
Venezuelan stocks continued their upswing to lead the region, buoyed by new hope that a tentative political alliance would block former coup leader Hector Chavez from winning the upcoming presidential race.
The blue-chip Caracas IBC index closed up 88.26 points or 2.32 percent at 3,897.83.
Elsewhere in the region
Argentine stocks took their upward cue from firmer Asian markets, but volume was thin.
"The market is heading higher for now, but players are taking only small positions," said a trader at a local brokerage.
The Merval index of leading stocks closed up 5.67 points, 1.18 percent, at 483.60.
One trader noted that the slim activity reflected fears that the Argentine economy is flirting with recession.
Increasing evidence of slower growth this week included news of a 8.9 percent slump in industrial output in October from the applicable year-ago figure.
Chile's stocks, driven by a recovery in benchmark electricity issues, also rose, closing up 85.52 points, or 2.27 percent, to 3,854.68.
Peruvian shares moved up as well, rising 14.75 points, or 1.04 percent, to 1,436.26. 
-- from staff and wire reports
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