May 16, 2019 / 3:06 PM / 3 days ago

EMERGING MARKETS-Latam FX softer, Brazil's real & Bovespa weaken on growth fears

    By Aaron Saldanha
    May 16 (Reuters) - Latin American currencies softened on
Thursday against a dollar that was strengthened by trade war
fears, while a Latin American stocks benchmark fell as losses in
index heavyweight Brazil overcame gains on other countries'
exchanges.
    Traders this week have generally scaled back exposure to
Latin American countries at risk of being affected by a
prolonged U.S.-China trade war, lifting the dollar, which was
also supported on the day by better than expected U.S.
homebuilding data.    
    MSCI's index of Latin American currencies
fell 0.2%, while index of Latin American stocks
slid 0.6%. 
    Brazil's real pierced through the 4 reais per dollar
mark for the second day in a row. It fell as much as 0.6% to a
seven-and-a-half-month low, while yields on local 10-year bonds
 inched up three basis points to 8.93%.
    Investor sentiment towards Brazil cooled, with the central
bank's president acknowledging there is a "relevant probability"
that Latin America's top economy contracted slightly in the
first quarter. 
    Roberto Campos Neto also said controlling inflation hinged
on the approval and implementation fiscal reforms, with markets
delaying investment until uncertainty reduces.      
    Investors have been on the look-out for the passage of a
proposal to reform Brazil's giant pension system, with the
currency and equities recently swinging broadly in lock-step
with news on the proposal's progress.
    Brazilian stocks dropped 0.7%, weighed on largely by
losses among financials and consumer discretionary stocks. The
Bovespa was on course to clock this year's lowest closing level.
    Mining firm Vale SA was among the Bovespa's few
gainers, rising 0.9%. Dalian-traded iron ore futures hit a
record peak earlier in the global day.
    The Mexican peso softened 0.2%, while stocks
edged up.
    Chile's peso and its stocks marked time,
as did Colombia's peso.
    Colombian stocks rose 0.8%, with oil firm Ecopetrol
 1.3% higher, against a backdrop of rising Brent crude
futures.
     Argentina's stocks benchmark tacked on 1%, largely
on gains among financials.
    
    Latin American stock indexes and currencies at 1432 GMT
    
 Stock indexes                                     daily %
                                       Latest       change
 MSCI Emerging Markets                   1012.63     -0.33
 MSCI LatAm                              2572.76     -0.57
 Brazil Bovespa                         91010.20     -0.67
 Mexico IPC                             43378.66      0.09
 Chile IPSA                              5006.91      0.03
 Argentina MerVal                       33555.83      1.02
 Colombia IGBC                          12349.37      0.82
                                                          
 Currencies                                        daily %
                                                    change
                                          Latest  
 Brazil real                              4.0170     -0.53
 Mexico peso                             19.0897     -0.22
 Chile peso                                692.5     -0.25
 Colombia peso                           3283.68     -0.03
 Peru sol                                  3.316      0.03
 Argentina peso (interbank)              45.0300     -0.07
                                                  
 
 (Reporting by Aaron Saldanha in Bengaluru
Editing by Alistair Bell)
  
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