July 16, 2019 / 2:57 PM / 3 months ago

EMERGING MARKETS-Mexico's peso dips on Pemex plan; Latam stocks rise

    By Agamoni Ghosh
    July 16 (Reuters) - Latin American currencies were lower on
Tuesday against a strong dollar, with Mexico's peso leading
losses as investors tried to assess a new plan unveiled by the
government for debt-laden oil firm Pemex, while equities in the
region moved higher.  
    The Mexican government will recapitalize Pemex and reduce
its tax burden to help build a new refinery and raise production
from onshore and shallow water fields, said Chief Executive 
Octavio Romero.
    Scanty details on how the government's new plan would help
Pemex failed to excite markets, however, with the peso
shedding 0.4%.
    Analysts have been concerned in the past over how the oil
firm, which is the world's most indebted company, can be rescued
without foreign investment - a proposition that President Andres
Manuel Lopez Obrador has opposed.
    "Pemex's situation is quite similar to what South Africa is
seeing with regard to Eskom. In terms of the sovereign,
its(government-backed recapitalization) definitely a negative,"
said Win Thin, global head of emerging market currency strategy
at Brown Brothers Harriman.
    Pemex's credit was downgraded to junk by Fitch this year,
while Moody's and S&P have the it on negative outwatch. 
    Other currencies in the region, including Chile'sand
Colombia's peso, slid as the dollar gained on the back of
strong U.S. economic data.
    Brazil's real outperformed as optimism over the
pension reform continued to boost sentiment. Stocks on the
Bovespa moved 0.5% higher, led by gains in energy and
financial companies.
    Intense discussion over amendments to the pension reform
bill, a key to bringing the economy back on track, delayed the
second round of voting to August. 
    Markets however, have been mostly positive, viewing last
week's vote of approval in the lower house as a first successful
step to getting the reform passed and helping restore confidence
in Brazil's economy.
    Stock indices in Chile and Colombia moved
higher between 0.2% and 0.4%, but Mexico's IPC index fell
marginally.  
    
Key Latin American stock indexes and currencies at 1440 GMT   
 Stock indexes                        daily %
                             Latest    change
 MSCI Emerging Markets       1060.69     0.28
                                      
 MSCI LatAm                  2942.99     0.04
                                      
 Brazil Bovespa            104337.95     0.52
                                      
 Mexico IPC                 42968.60    -0.22
                                      
 Chile IPSA                  5076.43     0.16
                                      
 Argentina MerVal           42156.01     2.18
                                      
 Colombia IGBC              13055.86     0.21
                                      
                                             
 Currencies                           daily %
                                       change
                              Latest  
 Brazil real                  3.7607    -0.15
                                      
 Mexico peso                 19.0455    -0.39
                                      
 Chile peso                    680.5     0.00
                                      
 Colombia peso               3200.52    -0.46
 Peru sol                      3.285    -0.06
                                      
 Argentina peso              42.6500    -0.35
 (interbank)                          
                                      
 

 (Reporting by Agamoni Ghosh in Bengaluru; Editing by Dan
Grebler)
  
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