EMERGING MARKETS-Colombian peso dips as new tax reform heads to Congress, Latam stocks rally

    * Rate of new COVID cases in Mexico more than double
    * Brazil's real down more than 4% so far in July 
    * Latam stocks Recover from two-week lows
    * EM stocks to outperform global equities - UBS

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    July 21 (Reuters) - Colombia's peso fell on Wednesday on
fears of renewed civil unrest there, while most other Latin
American currencies and stocks as risk appetite made a cautious
return after a brutal start to the week. 
    Returning from a day's holiday, Colombia's peso fell
up to 1% to November lows, even as the dollar lost momentum.

    The Colombian government on Tuesday presented a $3.95
billion tax reform bill to Congress, while unions and student
groups sought to revive the street protests that helped scupper
the reform's original iteration.
    The law would raise 15.2 trillion pesos per year,
significantly less than the 23.4 trillion pesos sought by the
government in an April proposal. 
    "Given that the bill does not go far enough to stabilize the
fiscal and debt dynamics, the new administration will be
challenged to present a new structural fiscal reform in the
first two years in office worth at least 1.5% of GDP in order to
shore up the debt dynamics," Goldman Sachs analysts wrote in a
    Anti-government protests, which had originated from
discontent with the bill, ravaged Colombia earlier this year,
and combined with underlying economic weakness from the
pandemic, cost Colombia two out of three of its investment-grade
debt ratings.
    Concerns over global growth being dented by the Delta
variant of the coronavirus also persisted. 
    The rate of new infections in Mexico more than doubled from
Monday to Tuesday. Mexico's peso extended losses to the
third straight session, hitting a one-month low.
    Meanwhile, Brazil's real rose 0.6%, but is down more
than 4% on the month. 
    A recent corruption scandal along with growing disapproval
of the President Jair Bolsonaro has hurt the real over the past
few weeks. Adding to the noise, Bolsonaro said on Wednesday he
is planning a ministerial shakeup next week, seeking to shore up
power ahead of elections next year.   
    Latam stocks rose slightly, with the MSCI index
 adding 1.3%. But they were recovering from a
near two-month low. 
    "For emerging markets (stocks)... the main driver is a
strong expansion in corporate earnings. We expect 37% growth in
earnings per share this year," strategists at UBS's chief
investment office wrote in a note, also noting a narrowing
vaccination gap with developed markets.
    "Given the combination of tailwinds and relatively appealing
valuations, we expect the MSCI Emerging Markets index
to gain around 10% by the end of December, outperforming global
equities," they said, adding Mexico, Malaysia and India are
their most preferred market in the EM universe. 
Key Latin American stock indexes and currencies:    
   Stock indexes           Latest    Daily %
 MSCI Emerging Markets      1314.49     0.26
 MSCI LatAm                 2531.69     1.31
 Brazil Bovespa           125525.13      0.1
 Mexico IPC                49984.60     1.48
 Chile IPSA                 4280.55    -0.27
 Argentina MerVal          65563.06    3.425
 Colombia COLCAP            1256.04     1.45
      Currencies           Latest    Daily %
 Brazil real                 5.1994     0.59
 Mexico peso                20.1920    -0.26
 Chile peso                   752.5     0.72
 Colombia peso                 3851    -0.51
 Peru sol                     3.946    -0.20
 Argentina peso             96.3600    -0.02

 (Reporting by Ambar Warrick and Susan Mathew in Bengaluru;
Editing by Angus MacSwan)