More trouble threatens region

Despite the show of support from the International Monetary Fund (IMF) – with a new loan for Brazil of $30 billion (£19 billion) over 15 months – investors remain anxious about the region.

Fernando Luque 16 September, 2002 | 6:06PM
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Latin America performed extraordinarily well in August. The MSCI Latin America index gained 9.1% gain (in euros) compared with a rise of 1.4% for the MSCI Emerging Market Free index. Brazil was the best performer with an increase of nearly 23%.

Brazil’s spectacular rise was the result of both the IMF loan and promises by leading foreign banks that they will retain their operations in the country. However, IntesaBCI, one of the largest Italian banks, has already announced that it will leave the region.

But the key problem is not money but investor confidence. In its recent Global Financial Stability Report the IMF expressed concern that the Brazilian crisis could hit the whole region. It was particularly worried that a leftist victory in the forthcoming elections could he

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Fernando Luque

Fernando Luque  is Senior Financial Editor at Morningstar Spain 

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