April 30, 2020 / 7:12 PM / 24 days ago

EMERGING MARKETS-Latam stocks, FX decline; Pemex's steep loss deepens Mexico's woes

 (There will be no Latam-focused emerging market report on
Friday, May 1, on account of the Labour Day holiday; coverage
will be resumed on Monday, May 4)
    April 30 (Reuters) - Latin American currencies dropped on
Thursday, and were set to end the month lower as continued signs
of economic damage from the coronavirus outbreak added to
concerns over stability in regional economies.
    Brazil's real and Mexico's peso fell about
1.7% and 1.3%, respectively. Latin American currencies were also
seen underperforming over the month in comparison to their
emerging market peers.
    The MSCI's index of regional currencies was
set to fall around 3% in April, while a broader index of
developing world currencies <.MIEM00000CUS was set to add 0.5%.
    Latin American stock markets retreated for the day. Like
currencies, they were set to underperform their broader emerging
market peers in April.
    The MSCI's index of regional stocks eyed a
5% gain in April, while an index of broader developing world
stocks was set to add 9%. 
    A swath of weak economic data from the developed world had
bought with it fresh risk aversion, adding to existing concerns
that many Latin American economies lacked the fiscal strength to
combat the coronavirus.
    Data showed Mexico's economy was set to mark its sharpest
quarterly contraction since 2009, although the preliminary
figures were slightly better than expected. 
    "Mexico stands to suffer the severest slow-down in Latin
America and it looks as though Banxico is now ready to favour
growth over currency stability," ING analysts wrote in a note.
    Adding to Mexico's woes, state oil company Pemex, hammered
by crashing crude prices and a sharp depreciation of the Mexican
peso, on Thursday posted a multibillion-dollar quarterly loss
that was far wider than losses a year earlier.
    In Brazil, data showed the unemployment rate in rose to
12.2% in the three months to March, its biggest rise in three
years, even as the full impact of the coronavirus was yet to be
reflected. 
    "President Jair Bolsonaro's handling of the economy and
cabinet departures have added a political risk premium to the
BRL, which may remain embedded during 2Q20," ING analysts wrote.
    Brazilian stocks fell 3.5%, dragged lower by a more
than 7% drop in Banco Bradesco SA, one of the
country's largest lenders.
    The bank's first-quarter profit missed expectations, while
its provisions for expected loan losses soared. 
    Mexican and Chilean stocks fell more than
1% each.
    In Argentina, the country risk tightened 539 basis points to
3,449 over safe-haven U.S. Treasury paper on Thursday, amid
speculation over the government's upcoming bond restructuring,
traders said.
    
    Key Latin American stock indexes and currencies at 1903 GMT:
 
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     922.57     0.32
                                   
 MSCI LatAm               1652.67    -3.33
                                   
 Brazil Bovespa          80230.96    -3.53
                                   
 Mexico IPC              36149.19    -1.96
                                   
 Chile IPSA               3966.76    -1.19
                                   
 Argentina MerVal        32582.01   -1.817
                                   
 Colombia COLCAP          1143.72    -0.19
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.4508    -1.80
                                   
 Mexico peso              24.0340    -1.23
                                   
 Chile peso                 835.2    -0.05
                                   
 Colombia peso            3956.43    -0.95
                                   
 Peru sol                   3.372    -0.19
                                   
 Argentina peso           66.8300    -0.12
 (interbank)                       
                                   
 
 (Reporting by Ambar Warrick and Susan Mathew in Bengaluru;
editing by Jonathan Oatis)
  
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