August 28, 2018 / 3:58 PM / 3 months ago

EMERGING MARKETS-Brazil real leads losses as election jitters overshadow NAFTA

    By Bruno Federowski
    BRASILIA, Aug 28 (Reuters) - The Brazilian real led losses
in Latin America as lingering concerns over presidential
elections overshadowed a largely positive environment for
emerging market assets.
    Investors have been increasingly fearful that the winner of
October's election may not commit to an unpopular agenda of
deficit-cutting and privatizations that they see as critical to
bringing back Brazil's investment grade sovereign rating.
    Several polls have showed jailed former President Luiz
Inácio Lula da Silva, who has railed against austerity, leading
the ballot, with market favorite Geraldo Alckmin failing to pick
up steam.
    The Brazilian real weakened 1.3 percent, by far the
biggest decliner in the region.
    "If the foreign scenario today weren't as favorable to
emerging markets, the real's decline would have been even
steeper," said Correparti brokerage head of currency trading
Ricardo da Silva.
    MSCI's emerging market index rose 1.8 percent,
reflecting a pick-up in appetite for risky assets after the
United States and Mexico reached a trade deal that could replace
the North American Free Trade Agreements.
    Canada's top trade negotiator joined her Mexican and U.S.
counterparts in Washington on Tuesday in a bid to remain part of
a trilateral North American trade pact, as U.S. officials
expressed optimism a deal could be reached this week.

    Thorny negotiations around NAFTA, which have dragged on for
much longer than originally envisioned, have weighed on demand
for emerging-market assets throughout the year.
    The Mexican peso fell 0.9 percent as investors
booked profits from the previous day's rally.
    
    Key Latin American stock indexes and currencies at 1550 GMT:
 Stock indexes                              daily %     YTD %
                                             change    change
                                 Latest              
 MSCI Emerging Markets             1069.14      1.8     -7.71
                                                     
 MSCI LatAm                        2551.58     2.42     -9.78
 Brazil Bovespa                   77244.47    -0.88      1.10
 Mexico IPC                       50462.60     0.09      2.25
 Chile IPSA                        5283.28     0.04      0.04
 Argentina MerVal                 25257.27     -0.7    -15.99
 Colombia IGBC                    12180.49    -0.01      7.12
                                                             
 Currencies                                 daily %     YTD %
                                             change    change
                                    Latest           
 Brazil real                        4.1333    -1.30    -19.84
                                                     
 Mexico peso                       18.9235    -0.87      4.10
                                                     
 Chile peso                          660.8    -0.33     -6.98
 Colombia peso                      2962.8    -0.79      0.65
 Peru sol                            3.293    -0.15     -1.70
                                                     
 Argentina peso (interbank)        31.5500    -1.84    -41.05
                                                     
 Argentina peso (parallel)            32.8    -1.07    -41.37
                                                     
 
 (Reporting by Bruno Federowski; Editing by Dan Grebler)
  
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