EMERGING MARKETS-Brazil stocks drop further as election polls show tight race

jueves 16 de octubre de 2014 10:50 GYT
 

By Asher Levine
    SAO PAULO, Oct 16 (Reuters) - Brazilian stocks sank for the
second straight session on Thursday after two voter polls showed
President Dilma Rousseff has more support than many investors
had imagined ahead of the Oct. 26 election.
    Brazil's Bovespa stock index dropped about 2
percent, adding to Wednesday's 3.24 percent decline.
    Polls by research firms Datafolha and Ibope released after
market close on Wednesday showed a statistical dead heat between
Rousseff and market-friendly challenger Aecio Neves. 
    Many investors believe a new administration would enact
policies that are more favorable to minority shareholders in
state-run companies and help lower the risk premium on local
assets. They had grown optimistic over Neves' chances in recent
days after he secured an important endorsement and performed
well in an early poll. 
    Shares of widely-traded firms such as state-run oil producer
Petroleo Brasileiro SA and lender Itau Unibanco
Holding SA, which tend to attract a higher share of
foreign investors, fell sharply.
    "The fight is still head-to-head, but a warning light is on
in the (Neves) camp," wrote Marco Aurelio Barbosa, an economist
with CM Capital Markets in Sao Paulo.
    Brazil's currency, the real, weakened for the third
straight day though found technical support at the 2.50 per
dollar level. 
    Traders attributed part of the currency's losses to comments
made by Neves' top financial adviser Arminio Fraga late on
Wednesday. In a Reuters interview, Fraga said a Neves government
would end the central bank currency intervention program that is
currently backstopping losses in the real. 
    "Most investors agree that the real will (weaken) eventually
with either election outcome," wrote Citi strategist Dirk Willer
in a client note. "The question is if it first strengthens with
an Aecio Neves win before selling off. With yesterday's comments
investors now think that an initial strengthening is less likely
and a (weaker real) is a one-way bet."
    Elsewhere in Latin America financial markets were broadly
weaker, tracking a global spike in risk aversion over concerns
about global economic growth. The MSCI Latin American stock
index touched its lowest level in two weeks,
while every major currency in the region slipped against the
dollar.
    Chile's peso weakened its most in nearly a month on
lower copper prices and ahead of a central bank rate-setting
meeting later in the day.
    Meanwhile, the Mexican peso extended Wednesday's
loss, falling to its weakest level since July 2012 as traders
continued to worry about weak global economic growth weighing on
the United States, the country's top trading partner.
    A Reuters poll released on Thursday showed Latin American
economies likely face years of weak growth and market volatility
as they struggle with lower commodity prices, slowing credit and
less abundant capital inflows. 

    Key Latin American stock indexes and currencies at 1427 GMT:
    
 Stock indexes                        daily %    YTD %
                             Latest    change   change
 MSCI Emerging Markets         970.5    -1.23       -2
                                               
 MSCI LatAm                   3099.6    -2.36    -0.82
                                               
 Brazil Bovespa             55094.02    -1.85     6.96
                                               
 Mexico IPC                 42639.05     -0.8    -0.21
                                               
 Chile IPSA                  3783.08    -0.22     2.27
                                               
 Chile IGPA                 18612.71    -0.23     2.12
                                               
 Argentina MerVal           9554.609    -1.02    77.23
                                               
 Colombia IGBC              12745.61    -0.59    -2.49
                                               
 Peru IGRA                   15796.3    -0.14     0.27
                                               
 Venezuela IBC               2890.93        0     5.64
                                               
                                                      
 Currencies                           daily %    YTD %
                                       change   change
                              Latest           
 Brazil real                  2.4741    -0.69    -4.74
                                               
 Mexico peso                 13.5957    -0.49    -4.16
                                               
 Chile peso                    592.3    -0.81   -11.18
                                               
 Colombia peso               2076.49    -0.40    -6.96
 Peru sol                      2.909    -0.07    -3.99
                                               
 Argentina peso               8.4750     0.03   -23.39
 (interbank)                                   
                                               
 Argentina peso                14.68     0.61   -31.88
 (parallel)                                    
                                               
 
        

 (Additional reporting by Paula Laier; editing by Andrew Hay)