June 22, 2020 / 8:01 PM / 16 days ago

EMERGING MARKETS-Latam stocks slump as surging virus cases raise economic worries

    * Number of COVID-19 cases in Latam surge
    * Brazil's Bovespa down 1.3%, Mexico's IPC off 0.7%
    * Mexico's peso, Brazil real up as dollar weakens 
    * "Best of Latam FX rally" likely run its course - JP Morgan

 (Recasts throughout, updates prices)
    By Susan Mathew
    June 22 (Reuters) - Key Latin American stock indexes fell on
Monday as the surging number of new COVID-19 cases in the region
sparked fears of further lockdowns that could deepen economic
pain. 
    Taking no solace from the rise on Wall Street, Brazil's
Bovespa index broke a four-session winning streak, down
1.3%, while main stock indexes in Mexico and Chile
 both lost more than 0.7%. Argentine stocks
fell for a fourth session in five. 
    More than a quarter of the 183,000 new COVID-19 cases
reported worldwide on Sunday were from Brazil, the World Health
Organization said. Brazil is the second worst-hit country after
the United States, and has frequently over the last month
recorded more than 1,000 deaths a day.
    Coronavirus-related deaths in Mexico have exceeded 20,000,
while Chile, the world's largest copper producer, has ramped up
safety measures at some of its biggest copper mines as the
country logged nearly 247,000 confirmed cases and more than
4,502 deaths due to COVID-19.
    Chile's peso traded flat on Monday despite a rise in
copper prices.
    A weak dollar aided gains in other Latam currencies with
Mexico's peso up 0.8%, while Brazil's real
firmed 1% after ending Friday with its biggest weekly loss since
late April.
    FX strategists at JP Morgan said "the best of the Latam FX
rally has likely run its course."
    "Signs of a second wave makes us more nervous that Latam can
continue to enjoy its balance of payments sweet spot for much
longer. We therefore expect a much bumpier third quarter that
will need a much more tactical approach," they said in a note.
    Problems in Brazil such as political uncertainty, continued
concerns over fiscal needs and the scope for more policy rate
cuts than priced by the markets should again start to dominate
price action for the currency, the JP Morgan strategists said.
    MSCI's index of Latin American currencies is
down about 18% this year, having recovered about 10% from
year-lows hit in May. Its stocks counterpart has
gained around 42% since March lows, but still remains down about
33% for the year. 
    Later this week, investors will be watching a central bank
meeting in Mexico. A Reuters poll expects the bank to cut its
key rate by 50 basis points to 5.00% as it attempts to help the
economy out of a health crisis-induced recession.
    Colombian markets were closed for a local holiday. 
    
    Key Latin American stock indexes and currencies at 1930 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     999.88    -0.15
                                   
 MSCI LatAm               1937.13    -0.15
                                   
 Brazil Bovespa          95359.32    -1.26
                                   
 Mexico IPC              38125.24    -0.73
                                   
 Chile IPSA               3993.92    -0.82
                                   
 Argentina MerVal        40116.05    -2.04
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.2670     0.94
                                   
 Mexico peso              22.4860     0.65
                                   
 Chile peso                 816.5    -0.13
                                   
 Peru sol                   3.505    -0.12
                                   
 Argentina peso           69.9700    -0.24
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Sonya Hepinstall)
  
Nuestros Estándares:Los principios Thomson Reuters
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