January 2, 2019 / 9:36 PM / 6 months ago

EMERGING MARKETS-Brazil shares hit all-time high, other Latam shares follow

 (Recasts throughout, updates prices)
    By Susan Mathew
    Jan 2 (Reuters) - A record high for Brazil shares and a more
than 2 percent gain in the real, spurred by positive policy
moves by the country's new government, helped Latin American
markets make a strong start to the new year and buck gloom in
global markets on Wednesday. 
    Far-right President Jair Bolsonaro's administration took
office on Tuesday and was quick to issue decrees affecting the
economy, agriculture and society, while forging closer political
ties with the United States.
    "Focus (is) on the new administration in Brazil and there is
a lot of expectation for some good change for the business side
of the economy," said Robert Lutts, president and chief
investment officer at Cabot Wealth Management Inc. 
    Brazil shares surged as much as 4.1 percent to hit
an all-time high before retreating slightly to close 3.6 percent
higher. The real firmed 2.4 percent and posted its best
day in more than seven months. 
    Markets welcomed reports that economy minister Paulo Guedes,
a market favorite, had drafted a temporary executive decree for
a much needed reform of the country's bloated pension system
that could save up to 50 billion reais ($12.9 billion) over the
next decade.
    However, "strong opposition in congress is expected,"
emerging market analysts Dirk Willer and Kenneth Lam from
Citigroup said in a note. "The strategy is to roll out a package
of changes which don't require congressional approval." 
    State-run power company Eletrobras was the top
gainer on the Bovespa stock index, up more than 20 percent,
after the government said it would carry out a partial
privatization of the electricity generation company. 
    The MSCI index of Latin American shares rose
3.8 percent, hitting a one-month peak in the session as a 2.7
percent jump in Argentine shares and an over 1 percent
rise in Mexico's IPC stock index added to its gains.
    The Latam index outperformed the broader emerging markets
 as well the world stock indexes as
concerns about slowing global growth were reinforced by weak
Chinese and European data.
    Among currencies, those of net crude exporters such as the 
Mexican and Colombian pesos firmed despite a
strong dollar as oil prices rose. Mexico's currency
touched a two-month high.
    The Chilean peso weakened, mirroring a decline in the
price of copper, the country's main export.
    
    Key Latin American stock indexes and currencies at 2123 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets          955.66     -1.06
                                        
 MSCI LatAm                    2663.19      3.79
                                        
 Brazil Bovespa               91012.31      3.56
                                        
 Mexico IPC                   42284.85      1.55
                                        
 Chile IPSA                    5125.37      0.39
                                        
 Argentina MerVal             31096.63      2.65
                                        
 Colombia IGBC                11181.22      0.33
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.7835      0.68
                                        
 Mexico peso                   19.5444      0.50
                                        
 Chile peso                      697.3     -0.52
                                        
 Colombia peso                  3237.5      0.23
 Peru sol                        3.368      0.00
                                        
 Argentina peso                37.6000      0.27
 (interbank)                            
                                        
 

 (Reporting by Susan Mathew in Bengaluru;
Editing by James Dalgleish)
  
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