Friday, June 20, 2003
(06-20) 14:59 PDT MEXICO CITY (<a href=www.sfgate.com>AP) --

Mexican stocks closed flat to lower Friday, pressured my modest losses in the liquid shares of wireless phone carrier America Movil.

The market's key IPC index closed down 3.3 points, or 0.1 percent, to 7080.69 points, ending the week with a gain of 96 points. At the end of 2002, the IPC stood at 6127.09.

Volume was a light 79 million shares worth 685.2 million pesos, compared with Thursday's also thin 72.3 million shares worth 778.1 million pesos. Volume in the past two sessions has been well below the average turnover of 1.3 billion pesos so far this month. SAO PAULO, Brazil (AP) -- SAO PAULO (Dow Jones)--After being closed for the Corpus Christi holiday Thursday, Brazil's stock market saw a sell-off Friday as the local investors reacted to declines on overseas exchanges the previous day and talk that the country's development bank, the BNDES, could sell shares of local companies from its portfolio.

The main Ibovespa index ended Friday's session at 13,130, down 2.8 percent from Wednesday's close at 13,510 points. Trading volume was moderate with 587 million reals exchanging hands.

Investors reacted negatively to Thursday's declines on the New York indices, selling off shares early and continuing the trend throughout the day.

The market was also spooked by a looming congressional inquiry into allegedly irregular overseas remittances of US$30 billion. Investors fear the inquiry could hamper efforts at reforming the nation's money-bleeding social security program and unwieldy tax system. Some analysts believe the current profile of Brazil's pension and tax regimes contribute to the nation's risk profile.

Share prices also moved on word that the national development bank, or BNDES, may sell shares from its portfolio to boost its financial position in the wake of defaulted loan payments by U.S. power group AES Corp. BUENOS AIRES, Argentina (AP) -- Argentina's large-cap Merval Index broke through the 800-mark for the first time in five years Friday, as investors took heart from International Monetary Fund approval of the second review of January's debt rollover accord.

At the close of Friday's session, the Merval had picked up 18.26 points, or 2.3 percent, to close at 801.17 points. The broader General Index registered more tempered gains and was up 600.38 points, or 1.76 percent, at 34,556.80 points.

Trading volume reached a strong 111.4 million, as heavy buying pushed the Merval up by more than 3 percent at several points during the day.

Analysts said the latest day of rises was the result of a combination of general optimism about the economy and IMF approval of the second review. That approval opens the way for negotiations on a new, long-term debt rollover accord, the IMF has previously indicated.

"With this news, there is just a general feeling that the business climate of the country is improving," said Rafael Ber, senior analyst at Argentine Research.

The market was also lifted by the announcement from the government statistics agency late Thursday that the economy grew 5.4 percent in the first quarter from a year earlier - the first interannual rise since 1998. SANTIAGO, Chile (AP) -- Chilean shares on the Santiago Stock Exchange fell Friday for the third session in a row, with heavyweights Entel and D&S declining, on the background of a sharp retreat in Brazilian shares.

Chile's blue-chip Ipsa index slipped 0.7 percent to 1244.85 points from 1253.56 Thursday, as did the Inter-10 index of more liquid, internationally traded Chilean shares, which ended at 121.51 from 122.31.

Volume bounced back to 13.22 billion pesos from 8.89 billion.

Brazilian shares fell far faster than their Chilean peers. Brazil is often considered a barometer for sentiment toward South America.

However, the declines in Chile continued to be gradual, considering the market's near-30 percent surge this year. CARACAS, Venezuela (AP) -- Venezuelan shares ended slightly lower Friday, with the IBC General Stock Index losing 0.1 percent to close at 13,681 points.

The exchange's biggest stock, CA Nacional Telefonos de Venezuela, which accounts for 40 percent of the IBC, ended 25 bolivars lower at 4750 bolivars.

CANTV has found buyers after a decision by the company's transfer agent to resume converting local shares to American Depositary Receipts.

The process was suspended in February when the government imposed currency controls to protect reserves severely affected by a two-month general strike that began Dec. 2, 2002.

The transfer agent resumed the conversions after it received clarification the process wasn't against the new rules, officials said.

Some investors are converting CANTV shares to ADRs, and selling them in the U.S. as an alternative to buying the greenback on the black market, traders said.

<a href=www.vheadline.com>venezuela's Electronic News Posted: Friday, June 20, 2003 By: Vitali Meschoulam

Date: Fri, 20 Jun 2003 17:10:26 -0400 From: Vitali Meschoulam meschoulam@eurasiagroup.net To: Editor@VHeadline.com Subject: clarification

Dear Editor: I appreciate the attention given to me in David Coleman's June 6 article in which I am quoted as saying, "he's basically shut the opposition down by signing an agreement that says let's do what's in the Constitution."

Apparently, (and according to the same article) some in Caracas could not fully understand what I was trying to say.

In order to clarify: What I meant to say is that for the last few years, Chavez has been demanding that the opposition abide by constitutional processes (i.e. revocatory referendum, etc...).

By signing the agreement with the opposition, Chavez exposed the shortcomings in their heretofore failed strategies to oust him by other means.

In my view, this was yet another Chavez victory ... even though it also clearly opens up the possibility of holding a referendum sometime in the future.

I hope this helps, Regards, Vitali Meschoulam meschoulam@eurasiagroup.net Senior Analyst, Eurasia Group

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, June 20, 2003 By: David Coleman

In the latest issue of his Gold Stealth Bull Market financial newsletter, analyst John Ing says that one of the biggest myths on the North American stock markets is that Toronto headquartered Crystallex International Corporation (KRY) does not own the rights to the gigantic Las Cristinas gold mine in southeastern Venezuela.

Ing writes: "Las Cristinas was awarded to Crystallex on September 17, 2002 ... this exclusive operating agreement was signed with Venezuelan Guayana Corporation (CVG) a multi-billion state-owned company that was given authority to contract with third parties over the Las Cristinas property from the Ministry of Energy and Mines, as the executing authority under the Mining Law."

"Following the cancellation of the Placer Dome contract due to a notice of default (no gold was produced) the property was repossessed on behalf of the Republic of Venezuela under Venezuelan mining law. The contract was cancelled in early November 2001 and the assets were repossessed November 16, 22001. The contract was gazetted and the copper concessions were cancelled on March 6, 2002 ... Crystallex owns the rights: fact."

Ing continues: Crystallex has reported a reserve update at the 100% owned Las Cristinas gold project in Southeastern Venezuela where an independent study by Reno-based Mine Development Associates shows the deposit holds proven and probable reserves of 9.5 million ounces, grading 1.33 grams per tonnes.

Crystallex has hired SNC Lavalin, to complete a feasibility study of Venezuela's largest undeveloped deposit is expected this fall ... current plans call for an initial 20,000 tonnes per day operation, capable of producing oxide and sulfide ores with a capital expenditure between $225-$230 million. The first phase should produce 275,000-280,000 ounces of gold.

Deutsche Bank has been selected as project finance advisor and, despite earlier ownership questions, we believe that Las Cristinas does not have any of the political problems or lack of economics of other major projects.

Crystallex will not have to move villages, cemeteries or change their processing facilities to mine Las Cristinas ... the government is Crystallex' partner and with power, water and abundant labor, this is an excellent project.

The Gold Stealth Bull Market financial newsletter concludes: "We continue to recommend purchase since Crystallex has one of the lowest market cap per ounce of production with respect to other major underdeveloped projects. As such the longer the shares drift down here, the more likely the company will become a takeover candidate. Maison has assisted the company in recent financings."

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, June 20, 2003 By: Jose Gabriel Angarita

VenAmCham economist Jose Gabriel Angarita writes: Venezuelan families are being more and more adversely affected by the kind of economic management to which we are being subjected. According to information published in the El Nacional and El Universal newspapers, the National Association of Supermarkets and Similar Businesses (ANSA) reported that supermarket sales were up 15% in nominal terms between May 2002 and May 2003. In real terms, however, consumption at supermarkets contracted by 16.1%, because the cumulative inflation rate between May 2002 and 2003 was higher, amounting to 35.1%.

Furthermore, comparing real growth in the first quarter of 2003 with that of the same period of 2002, we find that consumption was 26% lower this year, a plunge provoked by the period's intense political, economic, and social instability. Nevertheless, the industry organization indicated that most member establishments abided by the controlled prices, despite that policy's impact on their profit margins.

ANSA also pointed out that, though there were no serious cases of supply shortages, the variety of consumer goods on supermarket shelves has diminished, especially for the products subject to regulation. The outcome is the appearance of a black market where the goods in question are being sold at double their controlled price, which only intensifies the distortions in the price formation system.

Among the most dramatic consequences of the economic situation into which we have been dragged by an accumulation of inefficient economic policies is the decline of real salary levels. The Venezuelan public's loss of purchasing power as a result of rising inflation, unemployment, and the economic crisis as a whole has forced families to reduce their consumption of essential goods. And the prospects for a 50% inflation rate and an unemployment rate over 25% by the end of the year will only make things worse.

June 20 (<a href=quote.bloomberg.com>Bloomberg) -- Venezuela's Social Christian Party said the country's opposition should hold a presidential primary to select one candidate if President Hugo Chavez loses a binding referendum on his presidency later this year.

Social Christian Party President Eduardo Fernandez said a primary would be open to all Venezuelans opposed to Chavez, and would be the best and most open way to select a candidate.

A primary would allow Venezuela's opposition, which is united only by its members' dislike of Chavez, to avoid splintering and fielding more than one candidate, analysts have said. Polls have repeatedly showed that Chavez would easily be defeated if he faces only one opponent.

Chavez would lose a referendum on his presidency by 38 percentage points if a vote were held today, El Nacional reported, citing a poll by Consultores 21.

The May 17-27 poll of 1,500 Venezuelans found that 66 percent would vote for Chavez to leave office, while 28 percent would cast ballots for him to stay. Eight percent were undecided.