Asian Crisis Affects Latin American Markets

Latin American stocks fell for a second day on Friday in reaction to Asia’s currency and stock market crash. There were fears that the Asian crisis could influence investors in other emerging markets.

Argentina and Mexico (1)............... the highest falls, with their indexes down by 4 % by the (2)………….. of trading on Friday. Brazil’s BOVESPA index, which on the same day (3)………….. by far the steepest plunge in the Americas, was down 2.9 %.

“What’s happening in Hong Kong has been a terrible (4)………….. to the system,” said Richard Watt, who (5)………….. 3.5 billion dollars in emerging market investments. Investors in Brazil were concerned that its economic problems were dangerously (6)…………… to those that have caused the currency and market plunges in Thailand, Malaysia and other Asian (7)…….

“Brazil’s economy is far from (8)…………..,” said Ian Campbell, chief economist at Amro Bank (Amsterdam). “Its current account and fiscal (9)…………. are large and its currency is overvalued.” “ There’s no (10)…………. in trying to catch a falling knife,” said Jane Heap, Latin American stock strategist at Deutsche Morgan Grenfell. “There’s no room for (11)………….. in Brazil until the US and Asia get back to normal.”

There were also concerns that foreign investors who specialize in emerging markets could be (12)………… to sell their shares in Latin America to (13)…………. their Asian losses.

“There’s a lot of nervousness about whether investors will (14)………… their money out of stocks, because of instability in Asia,” said German Guerrero, chief trader at the Chilean brokerage Celfin SA.

Chilean markets were down only (15)…………… in afternoon trading. The Chile selective stock index fell 0.72 % and the Chile general stock index was down 0.64 %.

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