EMERGING MARKETS-Brazil stocks fall despite fiscal pledge, oil prices weigh on Latam

jueves 27 de noviembre de 2014 15:33 GYT

By Walter Brandimarte and Asher Levine
    RIO DE JANEIRO/SAO PAULO, Nov 27 (Reuters) - Brazilian
stocks ended lower on Thursday as investors mulled whether a
fiscal hawk picked by President Dilma Rousseff as the country's
new finance minister will have autonomy to significantly change
the country's economic policies.
    The choice of Joaquim Levy to succeed Finance Minister Guido
Mantega drew praise from economists and bankers in Brazil and
initially bolstered stocks as he pledged strict fiscal targets
for the next couple of years. Local markets had already rallied
recently as Levy's name was leaked to the press last week.
    But further market gains will depend on whether Levy
provides concrete signs that he will be able to change course on
Rousseff's past economic policies, which are widely criticized
by investors and economists for fueling inflation and failing to
boost economic growth. 
    "While Mr. Levy has talked tough on the need to restore
fiscal discipline, there is a substantial gap between the
policies he has advocated and the ones that were followed during
Ms. Rousseff's first term in office," said Neal Shearing, chief
emerging markets economist with London-based Capital Markets.
"It remains to be seen whether this divide can be bridged."
    The Brazilian real added to losses after Alexandre
Tombini, chosen by Rousseff to remain at the helm of the central
bank, signaled that policymakers are unlikely to further expand
their currency-intervention program.
    Tombini said the more than $100 billion worth of currency
swaps offered by the central bank since the beginning of its
intervention program more than a year ago are already enough to
"significantly meet" investors' demand for currency hedge.
    Brazil's benchmark Bovespa index lost 0.9 percent
after gaining as much as 1.7 percent earlier. The real 
shed 0.8 percent. Trading volumes were below average in Brazil
as well as in the rest of Latin America as many investors were
away for the U.S. Thanksgiving holiday.
    Weighing on Latin American markets was also a steep fall in
oil prices following an a meeting of the OPEC oil-exporter 
group that decided to keep output unchanged despite the recent
price slide. 
    Lower oil prices are detrimental to Latin American countries
that export the commodity such as Colombia, Venezuela, and
Mexico. They could also raise questions about the viability of
giant deep-sea oil development projects by Brazil's state-run
Petroleo Brasileiro SA.
    But preferred shares of Petrobras, as the Brazilian oil
company is known, were mostly driven by short-term expectations
about the future of Brazil's economic policies. 
    They initially rose 3.7 percent but later erased gains to
drop 4.8 percent.  

    Key Latin American stock indexes and currencies at 1850 GMT:
 Stock indexes                      daily %    YTD %
                                     change   change
 MSCI Emerging Markets     1010.58    -0.14     0.93
 MSCI LatAm                3063.99    -1.11     -3.2
 Brazil Bovespa           54603.52     -0.9     6.01
 Mexico IPC               44640.47    -0.07     4.48
 Chile IPSA                 3981.8      0.5     7.64
 Chile IGPA               19410.78     0.44     6.49
 Argentina MerVal         10115.97    -0.08    87.64
 Colombia IGBC            12265.03    -1.96    -6.17
 Peru IGRA                15235.47     -0.8    -3.29
 Venezuela IBC             3000.67    -0.06     9.65
 Currencies                         daily %    YTD %
                                     change   change
 Brazil real                2.5260    -0.78    -6.70
 Mexico peso               13.7705    -0.34    -5.38
 Chile peso                  600.7    -0.28   -12.42
 Colombia peso              2162.2     0.02   -10.65
 Peru sol                    2.912     0.00    -4.09
 Argentina peso             8.5200     0.03   -23.80
 Argentina peso              13.15     1.14   -23.95
 (Editing by Frances Kerry)