October 24, 2018 / 8:15 PM / 21 days ago

EMERGING MARKETS-Latam stocks follow Wall St's drop, FX weakens against strong dlr

    By Aaron Saldanha
    Oct 24 (Reuters) - Latin American stocks tracked Wall Street
lower on Wednesday, with Mexican shares plumbing four-month
lows, while regional currencies weakened against a stronger
dollar.
    The MSCI index of Latin American currencies
fell 0.9 percent, while losses in MSCI's index of Latin American
stocks deepened to 2.7  percent, extending
Tuesday's 1.3 percent drop.
    "As the day went on, the dollar strengthened on the good old
'risk-off sentiment' and the whole EM is clearly taking a hit on
that," said Kenneth Lam, emerging markets FX strategist at
Citigroup.
    "Partly also, the day started off with the dollar being
strong with weaker European data that did not help sentiment,
either."
    Disappointing company earnings, a spat between Italy and the
European Union over Italy's budget and worries of world economic
growth slowing have been some of the key factors putting markets
under pressure this week.
    "It's more of a case of global issues, not specifically the
Latam issues," said Mark Grant, chief global strategist at B.
Riley FBR.
    The Mexican peso weakened 1.7 percent, hitting its
lowest in more than a month and a half, weighed on by
uncertainty related to the fate of Mexico City's new,
under-construction airport.
    Incoming President Andres Manuel Lopez Obrador, known by the
initals AMLO, says the project has been tainted by corruption
and will be over budget. A public consultation is due to start
on Thursday to decide whether the government should complete the
project or upgrade an existing air base to complement the
current hub.
    Mexican stocks fell 0.9 percent, hitting a four-month
low, with regional airport operators such as ASUR and
GAP falling 3.3 percent and 1 percent, respectively. 
    "In terms of near-term certainty, the airport referendum or
the consultation vote is a key issue," said Citigroup's Lam.
    "Obviously, if the airport is scrapped, it signals that the
AMLO administration may provide less protection to investors and
also introduce more uncertainty to contracts that have already
been awarded."
    Brazil's real was about 1.3 percent weaker, while the
Bovespa stock index sank 2 percent, with losses seen
across the board.
    Local traders pinned an about 1.2 percent weakening in
Argentina's peso to funds from central bank notes
maturing being used to buy dollars. The local stock benchmark
 lost 0.8 percent.
    Colombia's peso led losses among Latin American
currencies, weakening 1.3 percent, trading at levels not seen
since November 2016.
    
    Key Latin American stock indexes and currencies at 1948 GMT
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets          950.54     -1.04    -17.08
                                                  
 MSCI LatAm                    2617.91     -2.67      -4.9
                                                  
 Brazil Bovespa               83467.05     -2.15      9.25
                                                  
 Mexico IPC                   46001.06     -0.96     -6.79
                                                  
 Chile IPSA                    5140.55      0.52      0.52
                                                  
 Argentina MerVal             28142.77     -0.76     -6.40
                                                  
 Colombia IGBC                12278.31     -1.13      7.98
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.7413      0.09    -11.44
                                                  
 Mexico peso                   19.6047     -1.57      0.48
                                                  
 Chile peso                      688.8     -0.67    -10.77
                                                  
 Colombia peso                    3165     -1.48     -5.78
 Peru sol                        3.342     -0.21     -3.14
                                                  
 Argentina peso                37.0000     -0.95    -49.73
 (interbank)                                      
                                                  
 Argentina peso                   36.5      1.37    -47.32
 (parallel)                                       
                                                  
 

 (Reporting by Aaron Saldanha in Bengaluru; editing by Jonathan
Oatis)
  
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