Brazil Stocks Continue To Slide
Sep. 17, 1998
RIO DE JANEIRO, Brazil (AP) _ Brazilian stock markets slid for a second day Thursday despite talk of an international aid package aimed at heading off a financial crisis.
The Sao Paulo Stock Exchange, Latin America's largest, closed down 4.8 percent after dropping as much as 10 percent just an hour into morning trading. The smaller Rio de Janeiro stock exchange lost 5.4 percent.
The sharp drop in Sao Paulo's Bovespa index triggered an automatic halt in trading for 30 minutes.
Brazil's stock and currency markets have been battered in recent days by the global financial crisis that began more than a year ago in Asia, then spread to Russia. Investors have become nervous about putting their money into other developing markets.
Brazil has lost some $25 billion in reserves in recent weeks, and stocks lost as much as three-quarters of their value from their high in March before recovering somewhat.
Investors were heartened earlier in the week by reports Brazilian officials were discussing a possible aid package with the International Monetary Fund.
``From what I've seen, the idea for the package isn't a bailout but a kind of emergency fund Brazil can draw from it if needs to,'' said Alexandre Barros, coordinator of the Brazil Business Forum. ``What's important isn't so much the money as the seal of approval the package would provide for Brazil.''
Reports that a package was in the works caused the market to rise 45 percent over three days. But on Wednesday, stocks turned lower on a lack of a concrete aid deal and after Federal Reserve Chairman Alan Greenspan squelched hopes of coordinated interest rate reductions among major countries.
Local newspapers reported that Merrill Lynch and Citibank were working with the IMF to put together as much as $150 billion in aid should Brazil need it.