September 25, 2017 / 4:50 PM / in 2 years

EMERGING MARKETS-EM stocks fall the most in four months after German elections

    By Bruno Federowski
    SAO PAULO, Sept 25 (Reuters) - Emerging-market stocks on
Monday posted their biggest daily loss in four months after
elections in Germany sparked fresh concerns over the future of
the Europe's economic integration.
    German Chancellor Angela Merkel secured a fourth term but
saw support for her conservatives fall unexpectedly to the
lowest level since 1949. Voters flocked to the anti-immigration
Alternative for Germany (AfD), the country's first far-right
party in parliament in more than half a century.
    ING Chief Economist Carsten Brzeski wrote in a report that
the new parliamentary configuration posed "clear brakes and
limits to deeper Eurozone integration."
    Uncertainty about Germany's role in Europe drove traders to
dispose of riskier assets, such as emerging-market stocks and
currencies, and rush for safe-haven assets.
    Latin American currencies suffered as a result, with MSCI's
regional index falling the most in a day since May 18. 
    Brazil's benchmark Bovespa stock index led the
losses, dragged down by shares of miner Vale SA on
the heels of falling China-listed iron ore futures.
    Shares of financial exchange operator B3 SA Brasil Bolsa
Balcão fell the most in four months after analysts at
Itaú BBA downgraded their recommendation on the stock to
"market-perform" from "outperform".
    The Brazilian real weakened 0.8 percent, in line with
a 0.9 percent decline by the Mexican peso and a 0.7
percent retreat by the Chilean peso.
    Demand for the U.S. dollar was bolstered by New York Fed
President William Dudley's comments that the U.S. central bank
is on track to gradually raise interest rates. Higher U.S. rates
could drain capital away from emerging markets.
    Key Latin American stock indexes and currencies at 1615 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
 MSCI Emerging Markets               1085.72     -1.5    27.83
 MSCI LatAm                          2937.38    -1.54    27.45
 Brazil Bovespa                     74496.93    -1.18    23.69
 Mexico S&P/BVM IPC                 50227.96    -0.17    10.05
 Chile IPSA                          5256.41    -0.63    26.62
 Chile IGPA                         26253.63    -0.58    26.62
 Argentina MerVal                   25059.38     0.26    48.12
 Colombia IGBC                      11092.33    -0.15     9.52
 Venezuela IBC                     421617.03     -0.3  1229.80
 Currencies                                   daily %    YTD %
                                               change   change
 Brazil real                          3.1522    -0.80     3.08
 Mexico peso                         17.9125    -0.91    15.81
 Chile peso                           629.31    -0.72     6.58
 Colombia peso                       2925.95    -0.75     2.58
 Peru sol                              3.258    -0.37     4.79
 Argentina peso (interbank)          17.4350    -0.69    -8.95
 Argentina peso (parallel)             17.93     0.11    -6.19

 (Reporting by Bruno Federowski; editing by Diane Craft)
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