February 19, 2019 / 10:09 PM / 7 months ago

EMERGING MARKETS-Latam FX firms, Brazilian stocks mount recovery

 (Recasts throughout, updates prices, adds market strategists'
    By Aaron Saldanha
    Feb 19 (Reuters) - A Latin American equities benchmark rose
on Tuesday, bolstered by a rebound in Brazilian shares, while
Latin American currencies broadly advanced against a soft
    Global currency traders wound back safe-haven dollar
holdings on hopes that the fresh round of U.S.-China talks would
aid strained trade ties between the world's two biggest
economies, setting the stage for Latin American currencies to
    Brazilian equities climbed back above the 97,000
mark. They more than made up ground they lost on Monday amid the
firing of a key aide of President Jair Bolsonaro, Gustavo
Bebianno, on corruption allegations.
    Bolsonaro's pension reform proposal is due to be addressed
in the country's Congress on Wednesday. Most investors believe
reform to the pension system is key to putting Brazil, Latin
America's top economy, on firmer footing.
    "The scandal isn't likely to damage public opinion of
Bolsonaro as he is seen as acting against electoral fraud," 
Citigroup strategists Dirk Willer and Kenneth Lam wrote in a
    "The scandal shouldn't materially hurt the chances of
pension reform, though it is a sign of political noise which is
to come during the negotiation phase," Willer and Lam said,
noting that Brazil's real was the developing world's
worst-performing currency on Monday after the news broke.
    MSCI's Latin American stocks index rose 1.5
percent, as gains in Brazil overcame losses in markets such as
Mexico, while its index of Latin American currencies
 gained 0.7 percent.
    Sao Paulo-traded stocks rose 1.2 percent, with gains seen
across the board.
    The real firmed 0.3 percent, following Monday's 0.9 percent
loss, while yields on local, 10-year bonds dipped
for a fifth session in six.
    Mexico's peso, among the developing world's most
traded currencies, firmed half a percent.
    The country's stocks benchmark dipped 0.1 percent as
declines among some consumer staples stocks outweighed a 4.8
percent rise in Grupo Mexico after Citi upgraded
the miner to "buy" from "neutral."
    Citi's global commodity team said it is bullish on copper,
noting exchange inventory at 10-year lows and saying that
Chinese weakness appears to be turning. 
    The most direct copper play among developing world
currencies, Chile's peso rose 0.7 percent as it tracked a
gain in prices of the metal, which hit an 11-week peak on hopes
of a U.S.-China trade deal.    
    "We remain bullish on the Chilean peso, which should benefit
from stronger copper prices and a potential US/China trade
agreement announcement," wrote Morgan Stanley strategists in
their global emerging market strategy note released over the
    Argentina's stocks benchmark fell 2.9 percent,
adjusting for weakness among American depository receipts (ADRs)
of the Latin American country's firms.
    ADRs of energy firm YPF SA slid 3.1 percent, while
the Buenos Aires-listed stock dropped 2 percent.
    Argentina's peso notched its weakest closing level
since early October. The local central bank has been snapping up
dollars, buying close to 1 billion dollars in the last month,
seeking to rein in peso strength and top up dollar reserves.

    Colombian stocks declined 0.3 percent, with oil firm
Ecopetrol SA falling half a percent. 
    Key Latin American stock indexes and currencies at 2135 GMT
 Stock indexes                                      daily %
                                        Latest       change
 MSCI Emerging Markets                    1036.97      0.02
 MSCI LatAm                               2897.16      1.54
 Brazil Bovespa                          97659.15      1.19
 Mexico IPC                              42949.50     -0.07
 Chile IPSA                               5386.31       0.3
 Argentina MerVal                        36292.29     -2.85
 Colombia IGBC                           12022.63     -0.34
 Currencies                                         daily %
 Brazil real                               3.7219     -0.19
 Mexico peso                              19.1551      0.44
 Chile peso                                 655.2      0.79
 Colombia peso                            3114.25      0.55
 Peru sol                                   3.316      0.09
 Argentina peso (interbank)               39.2700     -1.20
 (Reporting by Aaron Saldanha in Bengaluru; Editing by Leslie
Nuestros Estándares:Los principios Thomson Reuters
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