June 24, 2020 / 2:50 PM / a month ago

EMERGING MARKETS-Latam assets fall on spike in virus cases, dour growth forecast

    By Shreyashi Sanyal
    June 24 (Reuters) - Latin American currencies and stocks
fell on Wednesday, as coronavirus infections continued to climb
at an alarming pace in the region, with investors scurrying for
safety after downbeat economic forecasts for major regional
    The death toll from COVID-19 surpassed 100,000 in Latin
America on Tuesday, according to a Reuters tally, with few signs
of the outbreak easing. 
    The International Monetary Fund slashed its 2020 global
output forecasts further as it now expects global output to
shrink by 4.9%, compared with a 3.0% contraction predicted in
    Latin American economies saw some of the biggest downgrades,
with Brazil's economy now seen shrinking 9.1% and Mexico's 10.5%
and Argentina's 9.9% in 2020.
    The MSCI's index of Latin American currencies
 fell 0.9% and is already down 17% this year,
while its stocks counterpart is down about 33%,
despite double digit percentage recoveries since year-lows. 
    The Brazilian real slipped 1.5%, the most among
regional peers. 
    The Brazilian central bank said Brazil posted a current
account surplus for the third month in a row in May and foreign
direct investment rebounded slightly and the outflow from stocks
and bonds slowed further from the record sell-off in March.

    The Mexican peso declined 0.5%, with local investors
eying a central bank policy meeting on Thursday where it is
expected to cut interest rates by another 50 basis points to
    Data showed Mexican consumer prices rose 0.32% during the
first half of June, a figure unlikely to deter policymakers from
slashing rates. 
    "The CPI print may cause Banxico hawks to be more cautious,
but not enough to derail the easing cycle," analysts at Citi
wrote in a note. 
    "The virus situation in Mexico is grave, with the government
unwilling to alter course or policies, and with a significant
downward bias for activity and prospects." 
    Other regional currencies traded lower against a stronger
U.S. dollar.  
    Stocks in the regions also slipped, tracking a weaker open
on Wall Street.
    Among others, MSCI Inc, the world's largest index
provider, warned on Tuesday that the MSCI Argentina Index could
be removed from the MSCI Emerging Markets Index if it became
harder for foreign investors to access its stock market.
    Key Latin American stock indexes and currencies at 1424 GMT
   Stock indexes            Latest      Daily %
 MSCI Emerging Markets       1012.28        -0.23
 MSCI LatAm                  1945.30        -1.71
 Brazil Bovespa             95000.41        -1.02
 Mexico IPC                 37888.72        -0.86
 Chile IPSA                  4011.95        -0.49
 Argentina MerVal           40468.41       -0.821
 Colombia COLCAP             1132.03        -0.98
      Currencies            Latest      Daily %
 Brazil real                  5.2322        -1.54
 Mexico peso                 22.5200        -0.50
 Chile peso                      820        -0.21
 Colombia peso                  3713        -0.39
 Peru sol                     3.5337        -0.34
 Argentina peso              70.0900        -0.07

 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by
Bernadette Baum)
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