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Brazil shares end up 152 pct in 1999 at record high

RIO DE JANEIRO: Brazilian shares surged for the 10th day on Thursday, ending 1999 at a new record high as local buyers snapped up telecoms and heavily-traded stocks on expectations of a fresh wave of foreign investment in January.

Sao Paulo's benchmark Bovespa index closed up 1.9 percent at 17,092 points, bringing gains this year to a whopping 152 percent in local currency terms. Even in dollar terms, the index rose 69 percent.

"We've broken all the records this year and 2000 should be even better," Elisio Xavier, a fund manager at Finambras brokerage said.

The Bovespa took off as early as January when a shock currency devaluation suddenly made shares a lot cheaper in dollar terms, luring investors to big exporters that could benefit from the devaluation.

Iron ore miner Cia. Vale do Rio Doce, for example, soared 220 percent in 1999. The preferred shares ended up 9.9 percent at 50 reais on Thursday, also bolstered by the unexpected boom in local buys at the end of the year.

The stock market rally picked up steam over the last couple of months as local investors moved to position themselves in heavily-traded shares like CVRD and Tele Norte Leste, which are likely to be the first targets of foreign investors when they break into Brazil in 2000.

With Brazil, Latin America's biggest economy, poised to grow more than 3 percent next year, foreign banks have recommended it as one of the most promising markets in the region and as a good alternative to US equities which could begin to stagnate.

Tele Norte Leste ended up 3 percent on Thursday at 48.50 reais, bringing yearly gains to 221 percent.

A slew of telephone and technology companies have surged in recent sessions on expectations they will be big players in Brazil's burgeoning Internet market next year.

"Any stock that's even vaguely related to the Internet has just shot up and will probably keep going," Xavier said.

Cable TV operator Globocabo ended up 1.2 percent at 3.41 reais on Thursday, bringing gains in December alone to almost 150 percent. Globocabo announced plans earlier this month to launch a high-speed Internet network in January.

A handful of shares also surged on Thursday after the Bovespa released its final preview of its new benchmark index, which will now include Petrobras voting and aircraft maker Embraer preferred.

Investors snapped the shares up to included them in their Bovespa index portfolios, pushing Petrobras voting up 8.1 percent to 399.97 reais and Embraer up 5 percent to 8.15 reais.

Trading was surprisingly strong at 606 million reais despite the fact that operations closed down two hours early. That compares with average daily volume was 780 million reais in November.

Trading was expected to drop off in late December on Y2K fears and as investors went on vacation after Christmas and before New Year's holiday. Instead, volume has held out and the Bovespa index has surged 24 percent.

"This is a sign that the month of January is going to be very, very good," a local stock trader said. -Reuters