February 15, 2019 / 3:19 PM / a month ago

EMERGING MARKETS-Brazil's real buoyed by pension reform proposal; stocks dip

    By Agamoni Ghosh
    Feb 15 (Reuters) - Latin American currencies were mixed on
Friday with the Mexican peso slipping against a strong dollar
but Brazil's real rising, bucking a negative trend among its
emerging market peers as investors cheered the government's
release of details related to  pension reform.
    Sao Paulo's Bovespa index slid in line with its
emerging market peers on broad-based declines led by financials.
    The real was set to end higher for the week as
traders welcomed President Jair Bolsonaro's approval of text for
crucial pension reform that will be sent to Congress next week.

    "The pension reform is the most important thing for the
Brazilian economy right now. If we don't see anything positive
there, the real is likely to go on the downside," said Christian
Lawrence, senior market strategist, LatAm FX, Rabobank. 
    A note by rating agency Fitch on Friday also underlined
risks within the Brazilian economy that include a further delay
in pension reform along with limited expenditure reductions, and
a weak and uneven macroeconomic recovery.
    Mexico's peso fell to a two-week low against a robust
dollar, which recovered after dismal U.S. retail sales data hit
the greenback. 
    A Fitch downgrade for debt issued by Mexican state oil firm
Pemex has weakened the currency for a while and stoked fears
that further downgrades could significantly raise its financing
costs and result in dire fiscal consequences for the government.
    The Mexican government has said it will inject $3.6 billion
into the ailing company but analysts fear it may not be enough.

    "The injection is not going to save Pemex by any breadth.
The size of the problem this company poses for the Mexican
economy is still being underestimated the government," said
Lawrence. 
    Meanwhile, stocks on the Bovespa slid over 0.4 percent with
private education firm Kroton Educacional being the
biggest drag on the index.
    Petrobras shed 0.2 percent despite the rise in
overseas oil prices, while BRF was up 1.58 percent
amid reports that China will exempt 14 companies, including the
company, from anti-dumping duties on imports of chicken
products. 

    Key Latin American stock indexes and currencies at 1445 GMT 
    
    
 Stock indexes                             daily %
                               Latest       change
 MSCI Emerging Markets           1031.50     -0.74
                                          
 MSCI LatAm                      2879.51      0.68
                                          
 Brazil Bovespa                 97640.98     -0.38
                                          
 Mexico IPC                            -         -
                                          
 Chile IPSA                      5384.49      0.15
                                          
 Argentina MerVal                      -         -
                                          
 Colombia IGBC                         -         -
                                          
                                                  
 Currencies                                daily %
                                            change
                                  Latest  
 Brazil real                      3.7116      0.75
                                          
 Mexico peso                     19.3565     -0.52
                                          
 Chile peso                        663.2      0.12
                                          
 Colombia peso                         -         -
 Peru sol                              -         -
                                          
 Argentina peso (interbank)            -         -
                                          
 

 (Reporting by Agamoni Ghosh in Bengaluru; Editing by Jeffrey
Benkoe)
  
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