November 1, 2018 / 3:28 PM / 16 days ago

EMERGING MARKETS-Latam begins November firmer, Brazil up on Bolsonaro hopes

    By Susan Mathew
    Nov 1 (Reuters) - Latin American currencies firmed on
Thursday as the greenback retreated sharply from recent highs,
and stock markets followed suit, tracking peers elsewhere and
bolstered by Wall Street's higher open on recovering risk
appetite.
    The MSCI index of Latin American currencies
was 0.9 percent higher, moving in tandem with other emerging 
market peers, as the dollar eased from 16-month
highs.
    The best performer in the region, the Mexican peso,
rose more than 1.4 percent, recovering from the last session's
losses that were brought on by a Fitch warning that it may
downgrade the country's debt ratings on concerns about the
incoming government's policies.
    Fitch revised Mexico's rating outlook to negative after
Mexico's president-elect canceled construction of a new Mexico
City airport in which billions have already been invested.
    "You're seeing the large majority of emerging markets
currencies rally against the dollar in a largely risk-on day
globally," said Alejo Czerwonko, emerging markets strategist at
UBS Global Wealth Management's Chief Investment Office.
    "We certainly do not see ... the airport decision
positively. It tilts the balance towards further negative rating
actions for the sovereign and possibly quasi-sovereign firms."
    Brazil's real rose 0.8 percent as President-elect
Jair Bolsonaro set about staffing his new cabinet, with analysts
and investors keenly watching the appointments.
    Top anti-corruption judge Sergio Moro agreed to lead the
justice ministry, while a two-time congressman from the south
has been recommended as the new agriculture minister.

    "So far they are solid," Czerwonko said on the appointments.
    "So far what has been announced is in line with his
intentions to consolidate the government, implement micro
economic changes to make it easier for people in the country to
do business, reduce the size of the government, reduce red tape
and improve the application of the rule of law." 
    The Brazilian real, which has rallied on optimism over
Bolsonaro's election, is expected to hold at its current level
in the coming months, the latest Reuters poll showed.

    Stocks on Sao Paulo's Bovespa index climbed, led by
shares of lender Banco Bradesco, which rose 2.8
percent after reporting a rise in quarterly profit.
    State oil firm Petrobras followed oil prices
lower. It had gained earlier in the session after it said it
would sell its stake in an African venture to a Vitol-led
consortium for $1.53 billion, in a bid to reduce debt.
 
    Markets in Peru and Chile are closed for national holidays
on Thursday.  
    Key Latin American stock indexes and currencies at 1458 GMT:
 Stock indexes                             Daily %      YTD %
                                 Latest     change     change
 MSCI Emerging Markets            970.65      1.54     -17.48
                                                    
 MSCI LatAm                      2710.23      1.73      -5.79
                                                    
 Brazil Bovespa                 88108.26      0.78      15.32
                                                    
 Mexico IPC                     44621.54      1.55      -9.59
                                                    
 Argentina MerVal               30234.49      2.52       0.56
                                                    
 Colombia IGBC                  12227.64     -1.34       7.54
                                                    
                                                             
 Currencies                                Daily %      YTD %
                                            change     change
                                  Latest            
 Brazil real                      3.6941      0.72     -10.31
                                                    
 Mexico peso                     20.0438      1.43      -1.72
                                                    
 Colombia peso                   3188.22      0.84      -6.47
 Argentina peso (interbank)      35.5500      1.13     -47.68
                                                    
 

 (Reporting by Susan Mathew in Bengaluru; Editing by Rosalba
O'Brien)
  
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