EMERGING MARKETS-Latam stocks and currencies slump on global growth concerns

jueves 7 de abril de 2016 16:24 GYT
 

(Updates prices)
    By Bruno Federowski
    SAO PAULO, April 7 (Reuters) - Latin American stocks and
currencies largely slumped on Thursday as worries over global
economic weakness drove investors away from risky assets.
    The Mexican peso fell the most in nearly three
months to 17.91 per dollar, also hurt by a fall in oil prices.
Like many Latin American countries, Mexico funds part of its
budget with exports of commodities.
    Major central banks including the U.S. Federal Reserve and
the European Central Bank flagged signs of tepid growth abroad
this week. Their willingness to take policy action has done
little to offset concerns about the economy. 
 
    As a result, many traders have unwound trades seeking to
benefit from wide interest rate spreads. The Japanese yen
, a common source of funding for transactions known as
carry trades, hit a 17-month high against the dollar on
Thursday.
    Local political issues were also a key driver as the
Peruvian sol weakened for a fifth consecutive session
ahead of the country's general elections on Sunday. 
    The rise of leftist candidate Veronika Mendoza in opinion
polls and promises of "radical change" displeased many traders,
driving down the sol. 
    Mendoza is polling head-to-head against investor-favorite
Pedro Pablo Kuczynski for second place behind Keiko Fujimori.
Fujimori is not expected to secure a majority, which would
prolong the presidential race until a second-round vote.
    Strategists with Bank of America Merrill Lynch recommend
clients sell the sol, aiming at a rate of 3.55 per dollar. The
currency is currently trading near 3.40 to the dollar.
    "Given the wide differences in economic policy proposals by
Kuczynski and Mendoza, coupled with poll results showing that
the second round election would likely be competitive,
uncertainty about the direction of economic policy in the next
administration will likely increase," they wrote.
    Brazil's benchmark Bovespa index bucked the bearish trend,
rising 0.7 percent, supported by financial shares.
    Local media on Thursday reported executives testified that
President Dilma Rousseff's 2014 re-election campaign was partly
funded by kickbacks from large infrastructure projects.
 
    The allegations could bolster the case for fresh elections,
a move that many traders believe could help restore investor
trust in the economy.
        
    Key Latin American stock indexes and currencies at 1959 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets            807.50     -0.19      1.87
                                                    
 MSCI LatAm                      2032.29     -0.67     11.81
                                                    
 Brazil Bovespa                 48409.20      0.65     11.67
                                                    
 Mexico IPC                     45052.91     -0.51      4.83
                                                    
 Chile IPSA                      3890.16      0.17      5.70
                                                    
 Chile IGPA                     19092.70      0.12      5.19
                                                    
 Argentina MerVal               11867.97     -3.21      1.65
                                                    
 Colombia IGBC                   9704.00     -0.75     13.53
                                                    
 Venezuela IBC                  15441.76      2.59      5.85
                                                    
                                                            
 Currencies                                daily %     YTD %
                                            change    change
                                  Latest            
 Brazil real                      3.6931     -0.79      6.43
                                                    
 Mexico peso                     17.8935     -1.44     -3.85
                                                    
 Chile peso                          683     -1.31      3.76
                                                    
 Colombia peso                    3105.5     -0.80      2.01
                                                    
 Peru sol                         3.3941     -0.24      0.58
                                                    
 Argentina peso (interbank)      14.4500      1.16    -11.30
                                                    
 Argentina peso (parallel)          14.9      0.53     -4.41
                                                    
 
 (Reporting by Bruno Federowski; Additional reporting by Paula
Arend Laier and Anna Yukhananov; Editing by Dan Grebler and
Leslie Adler)