By Walter Brandimarte
NEW YORK, Nov 21 (Reuters) - Latin American markets
declined on Friday as a volatile Wall Street session left
investors unwilling to take risky positions in emerging
markets, which continue to suffer from cash outflows and fund
redemptions.
Brazil's stocks led losses in the region, falling more than
4 percent, as investors were catching up with Wall Street's
sharp losses on Thursday, when the Sao Paulo Stock Exchange was
closed for a national holiday.
After two weeks of sharp losses, investors were cautiously
looking for opportunities for bargains in emerging markets, but
analysts were still unsure about whether the market has reached
a floor.
"We find it impossible to speak with strong confidence
about the possible timing of a turnaround in the market,"
Kasper Bartholdy, head of sovereign strategy at Credit Suisse,
wrote in a research note.
"It is probably hard for the vast majority of investors to
think right now of adding exposure, and it seems sensible even
for those with fire-power to tread extremely carefully at least
until the end of November, and possibly well into December, to
allow time for the end-year deleveraging to run its course."
The MSCI stock index for Latin America .MILA00000PUS fell
6.48 percent, increasing losses for the week to nearly 18
percent. Brazil's benchmark Bovespa index .BVSP sank 4.2
percent, Argentina's MerVal .MERV slid 3.6 percent, and
Mexico's IPC .MXX declined 0.41 percent.
Currencies also weakened in the region: the Chilean peso
CLP=CL lost 2.78 percent, while the Brazilian real (BRBY)
weakened 2.63 percent.
Latin America's sovereign global bonds appeared to be
stabilizing, however, after recent losses. Brazil's global bond
due 2040 BRAGLB40=RR rose 1.188 point in price to bid
110.688, while Mexico's global 2017 MEXGLB17=RR gained a
quarter point to bid 85.00.
Yield spreads between emerging debt prices and U.S.
Treasuries, a key gauge of risk aversion, tightened 3 basis
points to 761 basis points, according to the J.P.Morgan EMBI+
index 11EMJ.
Ecuador's global bonds recovered slightly but continued to
trade at extremely distressed levels of less than 30.00 as
investors await the government's decision on whether to keep
servicing its debt, which has been deemed "illegal" by
President Rafael Correa.
Ecuador has threatened to stop payments on its global bonds
due in 2012 ECUGLB12=RR and 2015 ECUGLB30=RR, as well as
debt owed to Brazil's national development bank, the BNDES.
Reacting to the move, Brazil on Friday recalled its
ambassador from Ecuador, while Foreign Minister Celso Amorim
said the government will review its cooperation with Ecuador
"in light of these decisions."
(Editing by Tom Hals)
