The Advertiser From correspondents in Lima 15may03

A JUDGE in Peru's highest court has recommended exiled former President Alberto Fujimori face a murder trial for allegedly authorising two massacres carried out by paramilitary death squads a decade ago.

Supreme Court Justice Jose Luis Lecaros had made his recommendation in a report filed after a year-long investigation into the massacres during Fujimori's rule, his legal assistant Jorge Medina said today.

Under Peru's criminal law, a Supreme Court bench must now decide on Lecaros' recommendation.

Medina said the court would not make that decision until Fujimori returned or was extradited to Peru and could face a trial.

Fujimori fled to Japan in November 2000 amid a corruption scandal that toppled his decade-long regime.

Japan has so far refused to extradite him, and Peruvian prosecutors are piling up charges against the former president in hopes of pressuring Tokyo to turn him over.

Lecaros said he found evidence supporting allegations that Fujimori gave the leader of the so-called Colina Group hit squad the go-ahead to murder suspected sympathisers of the now nearly defunct Maoist Shining Path guerrilla movement.

The Colina Group killed 15 poor people during a raid on a cookout in Lima's squalid Barrios Altos district in 1991. A year later, the group murdered nine students and a professor at La Cantuta University.

For years, human rights groups have suspected that Fujimori and his ex-spy chief, Vladimiro Montesinos, masterminded the killings.

In March, Interpol placed Fujimori on its most wanted list, issuing a "red alert" for his arrest on a Peruvian warrant charging him with death squad murders.

Peru's judiciary has opened six cases against the fallen president, including authorising the death squad murders, abandoning his office, corruption and bribery.

Fujimori denies any wrongdoing. On his "From Tokyo" website, he claims to be the target of political persecution and says the accusations lack proof and credible witnesses.

Montesinos slipped out of Peru in 2000, but was captured in Venezuela in 2001. He has been in a high security prison since and faces more than 70 trials on charges ranging from corruption to murder.

<a href=www.sfgate.com>SFGate.com Tuesday, May 13, 2003
(05-13) 14:34 PDT MEXICO CITY (AP) --

Mexican stocks edged lower Tuesday, influenced by weakness in U.S. equities markets.

The market's key IPC index closed down 0.1 percent or 4.54 points to 6,491.89. At the end of 2002, the IPC stood at 6,127.09.

Volume was 95.8 million shares worth 1.29 billion pesos, well above Monday's 52 million shares worth 756.2 million pesos.

A Mexico City trader said the market continued to be tied to the performance of the U.S., where the Dow Jones Industrials fell 0.5 percent despite some strength in technology stocks that kept Nasdaq losses to a minimum.

The trader said hesitant U.S. markets were making it hard for local stocks to add to recent gains.

Mexican bellwether Telmex L shares fell 1.4 percent to 15.36 pesos, while the L shares of its sister wireless telephony concern America Movil slipped 0.6 percent to 8.99.

Broadcaster TV Azteca CPO shares closed down 1.9 percent to 3.63, and media group Televisa CPO shares ended 1.2 percent lower at 15.16.

SAO PAULO, Brazil (AP) -- Brazil's stocks rose Tuesday as investors bet on an interest rate cut next week after three better-than-expected inflation reports hit the market.

Despite selling on New York exchanges, the main Ibovespa index rose 0.8 percent to 13,429 points from Monday's finish of 13,320 points. Tuesday's close was the highest since April 2002.

Inflation results from the IGP-M, Fipe and IPCA indices showed price pressures are easing at a good clip. The trend could prompt the central bank to lower interest rates from 26.5 percent at a May 21 monetary policy meeting.

Most stocks gained across the board.

Jetmaker Embraer extended Monday's gains, rising 3.6 percent to 11.12 reals on news of a $2.1 billion order from U.S. Airways. The company will release what are expected to be weak first-quarter results later Tuesday, but the company may tell investors it's more confident about future sales strength.

Oil giant Petrobras rose 1.6 percent to 54.35 and bellwether Telemar gained 1.5 percent to 35.00

AES unit Eletropaulo ended flat at 31.99 after the U.S. parent company said it would present a new debt rescheduling proposal this week that's designed to halt a government plan to takeover and resell the debt-saddled company.

BUENOS AIRES, Argentina (AP) -- Argentine stocks dropped Tuesday for the second day in succession amid intense speculation that Carlos Menem would withdraw from Sunday's presidential elections.

The large-cap Merval Index slipped 5.12 points, or 0.8 percent, to 618.60 points, while the broader General Index lost 263.66 points, or 0.9 percent, to close at 28,671.47 points.

Recent polls have shown government-supported Nestor Kirchner winning the second round runoff by a landslide. The Merval fell 2.2 percent Monday on the assumption that Kirchner, perceived as the less market-friendly of the two candidates, would be the next president. But the possibility of Menem's last-minute withdrawal caused a further drop.

"The rumors that Menem would drop out are very strong," said Guillermo Wilhelam of local stockbrokers Puente Hermanos. "In the first round, Kirchner had only 22 percent, so this would mean he becomes president with very little political support."

On Tuesday, volume totaled 42.3 million pesos.

CARACAS, Venezuela (AP) -- Venezuelan shares ended slightly higher Tuesday, following the market's biggest stock, CA Nacional Telefonos de Venezuela, or CANTV, which gained 2 percent.

The IBC General Stock Index, of which CANTV accounts for 40 percent, closed at 8,790 points, up 33 points, or about 0.4 percent. Total trading was equivalent to about US$518,000.

CANTV gained 50 bolivars, or about 2 percent, to close at 2,500. Financial conglomerate Mercantil Servicios Financieros 'A' shares ended 0.6 percent lower at 1,312 each.

05/12/2003 - <a href=www.latintrade.com>Source: LatinTrade-BNamericas

Venezuela's incumbent telco Cantv (NYSE: VNT) managed to register net income of 10.5bn bolivares (US$6.5mn today) for the first quarter, down from 39.8bn bolivares a year ago, despite ongoing economic instability, according to the company's quarterly earnings statement. First quarter revenues fell 10.4% year-over-year, to 648bn bolivares, from 723bn bolivares for the first quarter of 2002. Cantv blamed the weak revenue performance on four factors: real rate decreases, continuing economic lethargy, an ongoing shift of customers to flat rate plans and fewer non-residential fixed lines. Revenues fell for local services, domestic long distance, international long distance, fixed-mobile interconnection and mobile services, by 12.5%, 21.5%, 33.4%, 25.1% and 11.8%, respectively.

Cantv said nominal rate increases of 28% and 29%, respectively, for local and DLD services, were partly to blame. However, the company noted that real rates for the two services actually declined year-over-year by 1.7% and 6.3%, respectively. Positive growth was reported for incoming ILD revenues, which increased 115% as Venezuelan expatriates took over a part of the burden of calls normally held by nationals. Data and Internet services also grew, by 45.3% and 20.2%, respectively. Ebitda was 255bn bolivares, down 17.5 percent from the 309bn bolivares registered in 1Q02. Ebitda margin remained stable from year to year, at 43%. Total lines in service remained flat at 2.7 million. Wireless subscribers decreased marginally, by 21,000, to close the quarter at about 2.5 million, while minutes of use fell more sharply, by 13.2%, as subscribers reacted negatively to an 18% tariff increase imposed by the company in early March. Among prepaid consumers, consumption fell further, by 23.5%, though Cantv said the drops were expected. The decline in voice traffic was partly boosted by a 76% year-over-year expansion in SMS traffic, to 822 million messages. SMS growth was propelled not only by substitution over voice, but by interconnection last year of SMS platforms between the country's three main mobile operators. Cantv ended the quarter with 204bn bolivares in free cash flow, compared to 285bn bolivares at end-1Q02. The fall in cash was partially offset by reduced capex, which was 17bn bolivares for the quarter.

Markets in the region have staged an impressive recovery and many of the economies are looking better than they have in a long time, CAROLYN LEITCH writes

globeandmail.com By CAROLYN LEITCH Saturday, May 10, 2003 - Page C1

Closing Markets

Friday, May. 16

S&P/TSX -16.4 6742.03 DJIA -34.17 8678.97 S&P500 -2.37 944.3 Nasdaq -12.85 1538.53 Venture 2.98 1074.65 DJUK 1.68 165.67 Nikkei -6.11 8117.29 HSeng -32.89 9093.18 DJ Net .55 53.58 Gold (NY) +2.10 354.90 Oil (NY) +0.40 29.14 CRB Index +0.70 241.33 30 yr Can. -0.02 5.25 30 yr U.S. -0.05 4.44 CDN$ buys US$ +0.0050 0.7317 Yen +0.6700 84.8900 Euro -0.0003 0.6339 US$ buys CDN$ -0.0094 1.3667 Yen +0.1300 116.0200 Euro -0.0065 0.8663

It took courage to put money into Latin America in recent years. In 2003, the brave are reaping their rewards.

Many investors fled the region last year after Argentina had embarked on the world's biggest debt default and many feared that South America's largest economy -- Brazil -- would soon topple into its own morass.

But this year, Brazil's recently inaugurated President Luiz Ignacio Lula da Silva, known as Lula, has won praise for his policies and calmed fears among his critics that the former trade unionist would drive down the value of Brazil's currency, stocks and bonds.

By all accounts, Latin America's financial markets have staged an impressive recovery and many of the region's economies are looking better than they have in a long time.

At the same time, the currencies have been gaining strength against the sliding U.S. dollar.

While many investors have veered toward Mexico and its relatively stable economy buttressed by the United States, Mexico's Bolsa index has risen 7.3 per cent in local currency and 9 per cent in U.S. dollar terms this year. Compare that with the stunning rise in Brazil's Bovespa stock index, which has soared 15 per cent this year in local currency and 38.1 per cent in U.S. dollar terms. There has been money to be made, too, in Argentina, where the Merval index has jumped 21.9 per cent in local currency and an eye-popping 49.2 per cent in U.S. dollar terms.

So sharp has been the runup in Brazil that Nandu Narayanan, chief investment officer at New York-based Trident Investment Management LLC and manager of the CI Emerging Markets fund, has begun taking profits in his holdings there.

Mr. Narayanan notes that Brazil's president still faces challenges, because the country's very high debt and real interest rates are difficult to grapple with. But he believes Lula has the support to push through painful changes because he is perceived as one of the workers.

"Lula, if anything, has proven a very pragmatic and sensible president who, in a way, is the best thing Brazil could have asked for."

But Mr. Narayanan points out that developing economies are geared to global growth. As a result, Brazil and other Latin American countries face harm from the spread of SARS in China.

While the economies of the United States, Europe and Japan stagnate, many economists have been looking to China to drive the world's growth. The country is a net importer of raw materials, and if SARS slows China's expansion, many economies will be hurt, the strategist says.

Meanwhile, Brazil's enormous debt load means that it needs to be on the receiving end of foreign capital all the time.

"A lot of the export story that drove Latin America is starting to be in question."

Mr. Narayanan has shifted his focus to Mexico, which he believes could prosper with a rebound in the U.S. economy.

"The policy mix in the U.S. is most conducive to driving growth."

Mexico has also benefited from oil exports, and the country's policy makers have the flexibility to weaken the peso further against the U.S. dollar and thereby fuel growth.

"They have a lot more policy flexibility than Brazil."

The long-term story in Mexico has been the improvement in living conditions, and Mr. Narayanan expects that to continue.

As a result, he likes companies such as Wal-Mart Mexico SA de CV, Coca-Cola Femsa SA de CV and Telefonos de Mexico SA.

"It's still pretty attractive, given the prospects in the rest of the world."

The strategist is steering clear of Argentina, because the country's markets offer huge risks and little clarity. Mr. Narayanan likens Argentina to a broken Humpty-Dumpty and says it's not clear how politicians will be able to put it together again.

"To tell you the truth, we couldn't call Argentina right now."

Political turmoil in Venezuela -- including a two-month oil industry strike orchestrated by opponents of President Hugo Chavez as part of a national protest designed to drive the populist leader from office -- has also kept Mr. Narayanan out of investments in that country for some time.

"You've got almost a rich-versus-poor battle going on in Venezuela," he says. "It's a very difficult situation and it's not one that I can see an easy resolution to."

So deep is Venezuela's malaise that economists estimate the economy will contract 12 to 15 per cent this year.

Scott Piper of Morgan Stanley Asset Management Inc. has a different view of the big picture in Latin America. The co-manager of the TD Latin American Growth fund has been shifting assets out of Mexico and into Brazil, Argentina and Chile in recent months.

In the previous two years, Mexican corporations offered better management teams and more predictable earnings, he said. Countries in South America, meanwhile, were overly indebted with poor underlying growth prospects and shaky reform initiatives.

Mr. Piper sees three trends that he believes are bullish for South America:

The declining U.S. dollar is making currencies of countries in the region more competitive;

Current account deficits as a percentage of gross domestic product are shrinking as a result;

Economic reform initiatives are improving conditions.

Mr. Piper notes that investors have woken up quickly to Brazil's brighter prospects and he is expecting the market to pull back after its recent rally. But he is continuing to increase his holdings in the country.

In Brazil, Mr. Piper favours commodities. While the strengthening Brazilian currency hurts exporters, the manager notes that the country is rich in natural resources and the lowest-cost producer in the world for commodities such as iron ore.

Mr. Piper is wary of Brazil's regulated sectors, such as electricity and energy, which could see more government interference in future.

The country's banks are well-managed and offer a good hedge against inflation, he says, but Mr. Piper says bank stocks look fully valued to him.

Mr. Piper has been trimming some holdings in Mexico at the same time because the outlook for U.S. economic growth is so uncertain.

"Mexico is essentially at the whim and will of the U.S. economic cycle."

Morgan Stanley has trimmed its growth forecast for Mexico's gross domestic product to 2.1 per cent this year from its previous forecast of 3.5 per cent.

But the manager has not been more aggressive in selling down Mexico, he says, because on a bottom-up basis, he still finds plenty of well-managed companies with good prospects. He notes that a growing number of people in Mexico are gaining access to credit. As a result, he likes the country's bank stocks and Wal-Mart Mexico SA de CV.

Looking at Argentina, Mr. Piper notes that the dramatic currency flight of last year has normalized. And while the country faces a landmark runoff election this month, he believes that regardless of the outcome, Argentina's newly elected leader will have to negotiate a new agreement with the International Monetary Fund and current bondholders.

"Both candidates have to address those problems and they know it."

Morgan Stanley is forecasting GDP growth for Chile this year of 3.5 per cent. Mr. Piper says this relatively robust growth should fuel consumer demand, while credit growth will be good for the country's banks. Mr. Piper has added to positions in sectors such as telecommunications and beverages.

While Mr. Piper has increased his weighting there in Chile, he still finds it difficult to find good value because stocks tend to be very expensive compared with others in the region.

Annette Hester, an economist and director of the Latin American Research Centre at the University of Calgary, sees bullish signs in the region but she warns that the economies are still vulnerable.

Brazil, for example, recently managed to float a $1-billion (U.S.) bond issue that was six-times oversubscribed.

"It looks good, but it's Latin American and it's a world that's very susceptible to shocks," she says of Brazil and its trading partners.

The Argentine economy seems to be doing better but the fundamentals are not there, she says. Venezuela, meanwhile, is split between those for and against President Chavez.

"It's very uncertain, very volatile and very polarized," Ms. Hester says of the political and economic landscape.

Ms. Hester add that the economies of Chile and Mexico are faring relatively well, but whether the economies of the United States and other trading partners will rebound remains to be seen.

"I'm leery of making big forecasts, knowing how unique and volatile the situation is in each individual country."

MEXICO GDP 2002: 0.9% 2003 forecast: 2.9%

Outlook: Mexico's economy moves in tandem with the United States. The outlook for growth is uncertain.

BRAZIL

GDP 2002: 1.5% 2003 forecast: 1.2% Outlook: The new president has inspired confidence and a rally in the stock market, but slower growth in China could dampen prospects for the resource-rich economy.

CHILE

GDP 2002: 1.9% 2003 forecast: 3% Outlook: Chile has fared well despite negative effects spilling over from Argentina and adverse terms of trade, but the expected firming of copper prices should underpin growth.

VENEZUELA

GDP 2002 est.: -8.9% 2003 forecast: -15% Outlook: Venezuela will be facing lower oil prices, which will make necessary reforms even more difficult in the middle of an acute political crisis.

ARGENTINA

GDP 2002: -11.1% 2003 forecast: 2% Outlook: The country faces enormous obstacles in its financial system and while the situation has stabilized somewhat in 2002, the authorities will face a difficult situation in containing inflation in 2003.

By KEN GUGGENHEIM The Associated Press (Published Wednesday, May, 7, 2003 9:35AM)

WASHINGTON, D.C. -- Senate Republicans and Democrats charged the Bush administration last Thursday with a failure to show leadership in Latin America at a time when the region is deep in crisis.

The handling of a free-trade agreement with Chile, immigration negotiations with México and policy on Cuba all came under scrutiny at a Senate Foreign Relations Committee nomination hearing for Roger Noriega for the State Department's top post in the region.

"This administration's policy in regard to Latin América has been in drift for the last two years," said Sen. Bill Nelson, D-Fla.

President Bush's pledged during his campaign to make this the "century of the Americas," but the fighting against terrorism and the war on Iraq has diverted attention from the hemisphere.

Colombia's civil war continues, Argentina suffers from a deep recession and political crises continue in Haiti and Venezuela.

More than two years into the Bush administration, Noriega is seeking to become its first confirmed assistant secretary of State for Western Hemisphere affairs. Bush's original nominee, Otto Reich, was denied a hearing in 2001 because the committee, then led by Democrats, considered him unqualified.

Reich was given a recess appointment, but Bush declined to remove him as a nominee when his term ended last year -- especially after the new Republican Foreign Relations chairman, Richard Lugar, suggested that someone else be nominated.

Noriega, the current ambassador to the Organization of American States, had been a committee staff member under former Sen. Jesse Helms and is likely to be confirmed.

Lugar, R-Ind., and other committee members used the hearing as a forum on the administration's Latin American policies. When Noriega said the Sept. 11 attacks had derailed hopes for an immigration agreement with México, Lugar wasn't satisfied.

"Life goes on, our government has a lot of priorities," Lugar said. "We ought to be capable of doing many things at the same time."

Lugar said he was bothered that the free-trade agreement with Chile would be delayed because of its opposition to the war in Iraq. He rejected suggestions that the Bush administration couldn't submit a treaty because of an anti-Chile sentiment in Congress -- and said the administration had to take charge of the issue.

Asked by Sen. Chris Dodd, D-Conn., whether Chile should "pay a price" for its anti-war stand in the U.N. Security Council, Noriega said the treaty should be considered on its own merits, regardless of the Iraq vote. Dodd was the strongest opponent to Reich's nomination.

Several committee members, including Republicans, have been critical of Bush's support for the Cuba embargo, though they have become less vocal since Fidel Castro began his crackdown on dissidents last month.

Sen. Mike Enzi, R-Wyo., who last week sponsored a bill to lift the Cuban travel ban, questioned Noriega about encouraging Cuban democracy through "people-to-people" exchanges. The Bush administration in March limited these exchanges by tightening restrictions on educational travel.

Noriega said he favors the exchanges, if they are more than just tourism.

"It would be something that I hope we could do more of, as a matter of fact," he said.