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EMERGING MARKETS-Latam stocks set to close year down while others soared
December 30, 2013 / 4:30 PM / in 4 years

EMERGING MARKETS-Latam stocks set to close year down while others soared

* Brazil Bovespa on track for 15 pct yearly loss
    * Chile IPSA down 14 pct on year, Mexico IPC down 1.6 pct

    By Asher Levine and Anthony Esposito
    SAO PAULO/SANTIAGO, Dec 30 (Reuters) - Latin American stocks
rose on Monday but remained on course to close the year lower,
ranking as some of the worst performers across global equities
markets.
    The MSCI Latin American stock index has
dropped nearly 16 percent this year, compared with a 5 percent
decline in the MSCI Emerging Markets Index.
    That contrasts with yearly gains of about 14 percent in the
FTSE 100 index, 26 percent in the Dow Jones Industrial
Average, and a whopping 57 percent in Japan's Nikkei
index.
    Brazil's benchmark Bovespa stock index rose 1.06
percent on Monday, though it is on track to post a more than 15
percent yearly loss.
    Deteriorating government finances, weak economic growth and
persistent inflation pressure have kept many investors at arm's
length from Brazilian shares, especially as developed markets
benefit from economic recovery.
    "It was another lost year," said Debora Morsch, a partner
with Zenith Asset Management in Porto Alegre, Brazil. "The
government showed that it is more interested in short-sighted
economic policies than reforms. There are other markets out
there with less institutional and regulatory risk." 
    In 2013, the total market value of the Bovespa fell by about
$216 billion, according to analysis firm Economatica.
    Earlier this month a Reuters poll showed the index will be
unlikely to recover 2013's losses next year due to a host of
uncertainties hanging over the local economic outlook.
 
    For 2014, some analysts are warning of the risk for erratic
policy moves ahead of October's presidential election as well as
the possibility of a sovereign credit downgrade and its impact
on corporate borrowing.
    Chile's IPSA index edged up 0.1 percent on Monday,
but was still on track to lose around 14 percent this year.
    Slower economic growth in China, Chile's main trade partner
and the world's top metals consumer, as well as a shift in
capital flows to the United States from emerging markets dragged
on the IPSA in 2013.
    "Economic growth (in China) took a hit leading to an
unwinding of commodities and risk assets," said Cesar
Perez-Novoa, co-head of Latin America research at BTG Pactual.
"That hit emerging markets and Chile wasn't the exception." 
    Chile is the world's No. 1 copper producer.
    Uncertainty surrounding an impending tax reform in Chile
also weighed, analysts said.
    Mexico's IPC index rose 0.65 percent on Monday,
heading toward a 1.6 percent yearly loss. Signs of stronger
growth in Mexico's economy and optimism related to major
economic reforms have helped Mexican stocks outpace their
regional peers this year.
    "In the end it had to do with the reforms -- fiscal, energy,
education," said Jorge Nevid, head of electronic trading at
brokerage firm Accival in Mexico City. "Whatever the case (the
government) has also shown itself to be attentive to the market,
and that has made the difference."
    
    Latin America's key stock indexes at 1544 GMT:
 Stock indexes          Latest         daily %     YTD %
                                       change      change
 MSCI LatAm             3,212.41       0.47        -15.81
                                                   
 Brazil Bovespa         51,810.62      1.06        -15.00
                                                   
 Mexico IPC             43,030.32      0.65        -1.55
                                                   
 Chile IPSA             3,700.45       0.1         -13.97
                                                   
 Chile IGPA             18,231.67      0.14        -13.47
                                                   
 Argentina MerVal       5,422.22       0.4         89.97
                                                   
 Colombia IGBC          13,061.62      0.39        -11.24
                                                   
 Peru IGRA              15,637.42      0.27        -24.20
                                                   
 Venezuela IBC          2,736,584.73   0           480.48

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