January 30, 2020 / 2:55 PM / 20 days ago

EMERGING MARKETS-Latam assets slip on China virus fears; Chile's peso hits two-month low

    * Chile's peso falls, tracks losses in copper prices
    * Mexican economy shrinks for first time in a decade
    * Investors spooked by rising death toll from China virus 

    By Shreyashi Sanyal
    Jan 30 (Reuters) - Stocks and currencies in Latin America
fell on Thursday, as investors grew more anxious about the
potential economic hit from the virus spreading in China, while
the Chilean peso touched its lowest level in two months. 
    A bout of panic selling took over global financial markets
as the death toll from the Wuhan coronavirus rose to 170, with
more than 8,100 patients infected.
    China, the world's second-largest economy, is a key export
destination for Latin American goods. Any economic disruptions
by the virus would dent demand in the country, and would likely
be reflected across the region.
    "Given expectations of further escalation in the numbers of
infections and deaths related to the coronavirus, anxiety,
nervousness and market pessimism internationally should increase
globally in the short term," Chetan Sehgal, lead portfolio
manager at Templeton Emerging Markets Investment Trust, wrote in
a note. 
    Chile's peso weakened 0.7% to 793.03 against the
dollar, hitting levels not seen since early December. Prices of
the country's main export, copper, sank to five-month lows as
funds sold on expectations of slowing demand in top consumer
China.
    Chile's central bank held its benchmark interest rate
unchanged on Wednesday, as it seeks to steady the country's
wavering economy following months of intense and often violent
protests.
    In Mexico, data showed Latin America's No. 2 economy
contracted for the first time in a decade last year, as
businesses reined in investment due to nagging uncertainty over
the economic management of President Andres Manuel Lopez
Obrador. 
    Its peso currency fell after two straight days of
gains, which was also due to the signing of a new
U.S.-Mexico-Canada (USMCA) trade agreement by U.S. President
Donald Trump on Wednesday.
    MSCI's index for Latin American currencies
fell 0.7%, while its index for stocks declined
1.8%. 
    Brazil's real also came under pressure. The country's
 Economy Minister Paulo Guedes said the government will submit
its administrative reform proposals to Congress "in a week or
two."
    One of Brazil's lower house speakers said that the country's
reform process will not be disrupted by local elections this
year.
    Stocks in Latin America's largest economy were also
lower on the day.
    The Argentine peso will also be in focus, as the
country will make an offer to creditors for the restructuring of
its debt in the second week of March, with a looming
presidential deadline for dealing with public debt.
   
  
    Key Latin American stock indexes and currencies at 1428 GMT
    
    Stock indexes             Latest       Daily % change
 MSCI Emerging Markets         1072.63                 -2.27
                                        
 MSCI LatAm                    2781.66                 -1.76
                                        
 Brazil Bovespa              113295.17                 -1.81
                                        
 Mexico IPC                          -                     -
                                        
 Chile IPSA                    4553.14                 -0.45
                                        
 Argentina MerVal             40057.21                -0.705
                                        
 Colombia COLCAP               1633.81                     0
                                        
                                                            
       Currencies             Latest       Daily % change
 Brazil real                    4.2467                 -0.67
                                        
 Mexico peso                   18.7797                 -0.47
                                        
 Chile peso                      798.3                 -0.85
                                        
 Colombia peso                    3409                 -0.70
 Peru sol                        3.354                 -0.30
                                        
 Argentina peso                60.2200                  0.04
 (interbank)                            
                                        
 

 (Reporting by Shreyashi Sanyal in Bengaluru; editing by
Jonathan Oatis)
  
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