• Fri
  • Aug 1, 2014
  • Updated: 2:21pm

Roller-coaster ride ahead

PUBLISHED : Sunday, 06 December, 1998, 12:00am
UPDATED : Sunday, 06 December, 1998, 12:00am

GLOBAL emerging markets look set for another turbulent week, after a key defeat in the Brazilian Congress and renewed turmoil in Russia is likely to dominate trading.


Brazilian shares closed down 1 per cent on Friday after an earlier vote rejected raising social security contributions, and the removal of a few tax exemptions, which would have added 2.5 billion reals (about HK$16.10 billion) to government coffers.


Although the amount lost is regarded as insignificant, Barclays Capital analysts said it had punctured the belief that the Brazilian Government was destined to get its way in every aspect of its planned austerity package.


In Russia, the market is also showing signs of losing patience with the government, particularly over its inability to present a convincing raft of economic reforms.


On Friday, Russian Prime Minister Yevgeny Primakov reiterated his commitment to free markets and trade, but international financier George Soros warned that the Russian economy was now beyond international help.


The rouble slipped to 20 to the US dollar last week.


'There is little that can be done from the outside until, probably, things get a lot worse and there will be some political developments that will allow again outside intervention,' Mr Soros said.


Analysts said investors will also be focusing on Venezuela where stocks closed down 4.1 per cent ahead of today's presidential election when radical populist Hugo Chavez is expected to win.


Even if he wins, uncertainty over Mr Chavez's government is expected to keep markets subdued.


Standard & Poor's MMS International said: 'Although the markets have partially priced in Chavez's victory in the last few days, uncertainty on Chavez's approach once he takes power keeps investors very nervous and the stock market may continue to fall, or at least will be highly volatile throughout the week.'

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