September 6, 2017 / 5:51 PM / 19 days ago

EMERGING MARKETS-Brazil stocks, currency up on renewed fiscal optimism

    By Bruno Federowski
    SAO PAULO, Sept 6 (Reuters) - Brazil's stocks and currency
rallied on Wednesday after Congress cleared two key fiscal
bills, adding to investor optimism over President Michel Temer's
ability to pass market-friendly reforms.
    Lawmakers late on Tuesday approved softened budget targets
for 2017 and 2018, as well as a bill setting a market-based
benchmark rate for state development bank BNDES that will
greatly curb subsidies in years to come.

    The measures are central to Temer's efforts to limit growth
of public debt without implementing further tax hikes. Investors
hope that will boost long-term growth in Brazil as the economy
emerges from the deepest recession in a century.
    Hopes of increased lawmaker support for his platform had
already grown earlier this week after the country's top
prosecutor threatened to partially revoke a plea deal that had
supported corruption charges against the center-right president.

    The Brazilian real strengthened 0.4 percent on
Wednesday as the cost of insuring against a Brazilian sovereign
default hit a new two-year low. The country's
benchmark stock index neared a record high. 
    Also supporting demand for Brazilian shares was news that
the Finance Ministry was analyzing the implications of
relinquishing veto rights on certain strategic decisions in a
few companies, the latest step to diminish the state's role in
the economy.
    Shares of state-controlled power utility Centrais Elétricas
Brasileiras SA, which the government plans to
privatize, rose as much as 2.7 percent. Planemaker Embraer SA
, which could be targeted by the measure, rose 3.6
percent, also lifted by a $1.1 billion firm order from SkyWest.

    The Chilean peso closed 0.7 percent higher at an
eight-week high, tracking a rally in prices of copper, a key
export. The currency has strengthened sharply in recent weeks,
but some traders believe the move may be overstretched.
    
    Key Latin American stock indexes and currencies at 1730 GMT:
 Stock indexes                                daily %    YTD %
                                    Latest     change   change
 MSCI Emerging Markets              1084.92         0    25.82
                                                       
 MSCI LatAm                         2949.01      1.43    24.22
 Brazil Bovespa                    73454.82      1.81    21.96
 Mexico S&P/BVM IPC                50613.23      0.62    10.89
                                                       
 Chile IPSA                         5097.85     -0.69    22.80
 Chile IGPA                        25498.36     -0.62    22.98
 Argentina MerVal                  24231.00      0.85    43.23
 Colombia IGBC                     11219.89     -0.13    10.78
 Venezuela IBC                    266926.16     -1.06   741.90
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                     Latest            
 Brazil real                         3.1059      0.41     4.61
                                                       
 Mexico peso                        17.7985      0.54    16.55
                                                       
 Chile peso                           618.2      0.74     8.49
 Colombia peso                       2912.4      0.48     3.06
 Peru sol                             3.236      0.03     5.50
                                                       
 Argentina peso (interbank)         17.2050      0.26    -7.73
                                                       
 Argentina peso (parallel)            17.91      0.45    -6.09
                                                       
 
 (Reporting by Bruno Federowski; Editing by Chizu Nomiyama)
  

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