January 22, 2019 / 10:19 PM / 6 months ago

EMERGING MARKETS-Latam stocks slump on growth woes; Brazil currency hits 3-week low

 (Recasts throughout)
    * Risk sentiment hurt after IMF cut 2019 global growth
forecast
    * Argentine stocks dive more than 3 percent
    * Brazil markets fall as president fails to detail pension
reforms

    By Susan Mathew
    Jan 22 (Reuters) - Latin American stocks fell sharply on
Tuesday, in line with world stocks, as global growth slowdown
fears gripped markets after the International Monetary Fund cuts
its growth forecast. 
    The IMF revised its 2019 global growth forecast lower than
what it had forecast in October, a day after risk sentiment was
hurt by China saying its economy grew at its slowest rate in 28
years.
    The MSCI Index of Latin American shares fell
nearly 1 percent, with Brazil stocks shedding 0.9
percent, and Argentine equities tumbling 3.6 percent and
posting their biggest one-day loss in more than one month. 
    "Equity markets (are) in negative territory and overall
trading with greater risk aversion in view of a lower global
growth outlook with the IMF cutting its ... forecast, as well as
a perception of scarce progress in trade negotiations between
the U.S. and China," analysts at Banorte said in a note.  
    On the Sino-U.S. trade front, investors now look toward the
high-level meeting at the end of January for the next round of
trade negotiations.
    In Brazil, consumer stocks were the biggest losers with meat
distributors Marfrig Global Foods and BRF
leading losses after Saudi Arabia trimmed its list of authorized
Brazil chicken exporters.
    State oil firm Petrobras was one of the biggest
drags as oil prices fell.
    Mexico's IPC index declined 0.6 percent to its lowest
in a week, while Chilean shares dropped 1 percent.
    Among regional currencies, the Brazilian real fell
the most, down 1.6 percent to its lowest since Jan. 2 after
President Jair Bolsonaro tried to appeal to big businesses at
the World Economic Forum in Davos, but disappointed investors by
failing to detail highly anticipated pension reforms plans.
   
    "The pension reform plan is the most important thing for
Brazil and for Brazil markets, and any lack of clarity is going
to weigh on the currency," said Christian Lawrence, a senior
market strategist with Rabobank. Lawrence had not expected the
president to discuss pension reforms at the Forum. 
    The Colombian peso posted its worst day in nearly
five weeks as oil prices declined, while the Mexican peso
edged higher. 
    "The Mexican peso is still attracting carry trades," said
Lawrence. "Today's down day isn't enough to trigger movement out
of the peso for those involved in carry trade."
    But the currency could see outflows if there are further
risks, he said. Perceived policy missteps by the country's new
government are one of the biggest local risk factors for Mexican
assets.
    
    Key Latin American stock indexes and currencies at 2142 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets         1010.63     -0.77
                                        
 MSCI LatAm                    2820.02     -0.94
                                        
 Brazil Bovespa               95103.38     -0.94
                                        
 Mexico IPC                   43768.08     -0.59
                                        
 Chile IPSA                    5401.13     -1.01
                                        
 Argentina MerVal             34042.76     -3.57
                                        
 Colombia IGBC                11702.17      0.24
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.8123     -0.23
                                        
 Mexico peso                   19.1692     -0.05
                                        
 Chile peso                     673.35     -0.19
                                        
 Colombia peso                 3143.74     -0.62
 Peru sol                        3.334     -0.21
                                        
 Argentina peso                37.5100      1.31
 (interbank)                            
                                        
 

 (Reporting by Susan Mathew in Bengaluru;
Editing by Phil Berlowitz)
  
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