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EMERGING MARKETS-Latam stocks near 2019 low led by Argentina slump, FX weakens

Latin American stocks hovered near 2019 lows on Wednesday led by steep losses in Argentina and Brazil which resumed trading after a two-day Carnival holiday, while currencies of oil exporters in the region fell as crude prices came under pressure. MSCI’s index of Latin American stocks fell 1.3 percent, tracking losses across the region, barring Chile and Colombia which ended higher. Argentina’s Merval index as well as its peso led declines across the board on private purchases of U.S. dollars in the face of high inflation as markets resumed trading after the Carnival holidays. Argentina is going through a crisis that originated in 2018 due to an abrupt depreciation of the peso, resulting in a prolonged recession and very high inflation. Analysts ascertain that economic indicators and currency moves will be closely linked to the presidential elections scheduled in the second half of the year. “Volatility (on the ARS=) is likely to remain high, especially as we enter the election season,” said Citi analysts in a note. Sao Paulo-traded stocks which resumed trade after Carnival holidays for a shorter session, dropped 0.4 percent led by declines in the consumer and financial sectors with meat processor JBS being the biggest drag on the index. Despite the sharp drop on the index, miner Vale rose over 2 percent after Brazil’s mining minister called the firm vital to the country’s economy despite a dam disaster that killed more than 300 people. Mexico’s IPC index fell about half a percent reversing earlier gains which came after central bank board member Jonathan Heath said the country was a “long way” from losing its investment grade rating. Material and industrial stocks weigh on the index with chemical manufacturer Alpek emerging as the biggest loser. Peru’s benchmark index closed lower hit by the decline in financial and consumer sector, despite the advance of some miners in the face of the rebound in copper prices. Stocks in Chile and Colombia were the only gainers in the region, with the latter hitting a four-month high. Most currencies in the region slid on the day, with Mexico and Colombia’s pesos buckling under pressure from oil prices. Brazil’s real fell over 1.5 percent hurt both by oil price pressures and as investors adjusted positions after returning from the extended Carnival weekend.

Key Latin American stock indexes and currencies at 2120 GMT

Stock indexes                             daily %                                                                   Latest             change

MSCI Emerging Markets 1054.78           -0.03 MSCI LatAm                      2733.35           -1.36 Brazil Bovespa                  94206.88         -0.42 Mexico IPC                        41914.27         -0.51 Chile IPSA                          5256.07            0.50 Argentina MerVal              32340.43        -4.42 Colombia IGBC                  12467.15         0.79

Currencies                                            daily %                                                                           change                                                                           Latest

Brazil real                           0.26039          -1.61 Mexico peso                      19.3470          -0.52 Chile peso                          659.55            -0.32 Colombia peso                  3101.63          -0.15 Peru sol                              3.307                0.06 Argentina peso                 40.7000           -2.01 (interbank)

(Reporting by Agamoni Ghosh in Bengaluru; Editing by Lisa Shumaker)

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