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Brazil stocks climb to record, telecoms lead again

SAO PAULO: Brazilian stocks, led by telecom shares, climbed to a record close again on Friday, after Spain's Telefonica said two days ago it would buy the rest of the shares of its South American units at a handsome premium.

The Sao Paulo Stock Exchange's Bovespa index of leading shares rose 2.1 percent to finish the week at record 17,658. On Thursday, the index rose 4 percent.

Telefonica late Wednesday said it would swap shares in its two Brazilian units Telesp and Tele Sudeste for Brazilian Depositary Receipts (BDRs) in the Spanish company. Telefonica said the deal represented a 40 percent premium over the current valuations on the Brazilian telephone carriers.

Telesp on Friday gained 2.9 percent to 52.5 reais, and Tele Sudeste, a mobile phone operator, rose 3.5 percent to 17.3 reais. The stocks jumped 13.8 percent and 20.7 percent, respectively, on Thursday.

"A big chunk of money is now going to telephone stocks," said Roberto Dotta Filho, fund manager at Tudor Asset Management. "The market is now also looking for alternative phone stocks that could benefit after portfolio managers replace Telesp and Tele Sudeste."

Among the telecoms that gained ground, Tele Centro Sul rose 6.6 percent and Telemar climbed 2 percent.

Telebras receipts, the Sao Paulo bourse's bellwether issue grouping a dozen privatised telephone stocks, rose 3.7 percent to 251 reais. The exchange said it planned to create a new basket issue of telephone stocks excluding Telesp and Tele Sudeste. Telebras receipts are due to expire in April.

Banking stocks were also among leading gainers Friday after Brazil launched its first international bond of 2000, raising 750 million euros via a well-received 10-year transaction.

Bradesco, the country's biggest private bank, jumped 11 percent to 16.3 reais, and Banespa, owned by the federal government, rose 3 percent to 64.9 reais amid expectations the successful sovereign issue may have paved the way for more Brazilian bond issues and more business for banks.

Turnover on the bourse Friday was fairly strong at 1.2 billion reais ($667 million). The Bovespa index was up 3.2 percent on the year by Friday's close.-Reuters