May 14, 2019 / 2:59 PM / 2 months ago

EMERGING MARKETS-Latam stocks rise, FX firms as Trump turns optimistic on China trade deal

    By Aaron Saldanha
    May 14 (Reuters) - Latin American stocks rose on Tuesday and
regional currencies firmed against the dollar as U.S. President
Donald Trump sounded optimistic about prospects for a trade deal
with China even as his administration readied 25 percent tariffs
on all remaining Chinese imports. 
    Trump said he thought recent discussions in Beijing would be
successful, while Beijing has agreed to keep talking with
Washington, a day after announcing details of new tariffs on
U.S. imports.
    MSCI's index of Latin American stocks added
0.6%, recovering ground after Monday's 2.6% fall. MSCI's Latin
American currencies index gained 0.5%, although
risk appetite was tepid.
    "To us it is difficult to believe that last week's pullback
is all it takes to fully price the weaker global trade
environment. We therefore remain defensive on EMFX," Dirk
Willer, head of emerging market strategy at Citi Research, and
Kenneth Lam, an emerging markets FX strategist, wrote in a note.
    Sao Paulo-traded equities edged up 0.1%, aided by
gains in consumer staples and materials stocks.
    State-run oil firm Petroleo Brasileiro SA's common
 and preferred shares rose 0.1% and 0.3%,
respectively, against a backdrop of rising oil prices.

    Vale SA was up 0.3%, clawing back some lost
ground from Monday's 4.1% dive. The mining giant is reviewing
its assets portfolio and considering doubling its Carajas Serra
Sul iron ore mine's output after 2020.
    Brazil's real firmed 0.6%, while yields on local
10-year bonds fell 9 basis points to 8.81%.
    Mexican stocks edged up, while the peso firmed
0.5%.
    The Mexican government is taking steps to ease state oil
firm Pemex's debt woes, including $2.5 billion in debt
refinancing and renewing credit lines with three banks as well
as a gradual tax cut.
    "The announcement that the fiscal regime of Pemex could
change as early as next year poses a meaningful risk for the
sovereign, as any reduction in taxes would impact directly the
government's revenues," Carlos Petersen, senior analyst at the
Eurasia Group, wrote in a note.
    Argentina's stocks benchmark rose 1.6%, while the
country's peso firmed. 
    
    Latin American stock indexes and currencies at 1430 GMT
    
 Stock indexes                                         daily %
                                           Latest       change
 MSCI Emerging Markets                       1014.61     -0.18
 MSCI LatAm                                  2602.15      0.62
 Brazil Bovespa                             91827.80      0.11
 Mexico IPC                                 43164.95      0.05
 Chile IPSA                                  5008.48      0.77
 Argentina MerVal                           32821.93      1.62
 Colombia IGBC                              12390.32      0.22
                                                              
 Currencies                                            daily %
                                                        change
                                              Latest  
 Brazil real                                  3.9736      0.10
 Mexico peso                                 19.1099      0.60
 Chile peso                                    692.6      0.12
 Colombia peso                               3277.93      0.76
 Peru sol                                      3.322      0.15
 Argentina peso (interbank)                  44.9200      0.58
                                                      
 
 (Reporting by Aaron Saldanha in Bengaluru; Editing by Jeffrey
Benkoe)
  
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