July 24, 2020 / 7:12 PM / 14 days ago

EMERGING MARKETS-Brazil's real to outperform Latam peers for week, but sentiment weak

    * Argentine stocks to outperform peers for the week
    * Real up around 4% this week
    * Sino-U.S. tensions weigh, to weaken risk appetite

 (Adds details, graphic, updates prices)
    By Shreyashi Sanyal and Ambar Warrick
    July 24 (Reuters) - Brazil's real rose on Friday and was set
to outperform its Latin American peers for the week amid some
improving economic readings, with most other regional risk
assets also set for weekly gains.
    The real rose 0.4%, and was set to add nearly 4% for
the week. Inflation in Brazil rose in July at its fastest pace
in six months thanks to rising transport and fuel costs, but at
a far slower rate than economists had expected.
    Still, the reading indicated that economic activity was
picking up after the scaling back of coronavirus-driven
lockdowns, a trend that has been reflected across the rest of
Latin America as well.
    The real has recovered sharply from record-low levels hit in
May, thanks to sustained intervention from the central bank. But
local central bank officials have expressed concerns over being
able to manage heightened volatility in the currency, due to the
pandemic. 
    Bets on a COVID-19 vaccine had driven risk appetite through
the week. However, an escalation in Sino-U.S. tensions appeared
to be spurring risk-off, going into next week.
    China ordered the United States to close its consulate in
the city of Chengdu, responding to a U.S. demand this week that
China close its Houston consulate.
    The move saw global equities retreating, with regional
equities also falling in tandem. Still, most bourses were set
for weekly gains, with Argentine stocks set to
outperform their peers.
    
    Argentina's 1.7 trillion pesos ($23.7 billion) of short-term
'Leliq' notes have helped mop up liquidity in the market and
hold back rising prices, leaving the central bank with a tricky
task to rein in the debt without reigniting inflation.

     Mexico's peso rose to the dollar. Data showed the
country's economy shrank another 2.6% in May from April after a
record decline the previous month.
    "Although the economy will probably start to improve in the
second half of the year given the easing of restrictions in some
states, a slow and complex recovery is expected due to a severe
drop in investment spending," analysts wrote in a UBS client
note.   
    Bolivia's general election will be pushed back until Oct. 18
due to the coronavirus pandemic, which could fan tensions
between the interim conservative government and the socialist
party of former President Evo Morales.
    
    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets         1059.95              -1.64
                                        
 MSCI LatAm                    2057.64              -0.48
                                        
 Brazil Bovespa              102188.31               -0.1
                                        
 Mexico IPC                   37254.26              -0.48
                                        
 Chile IPSA                    4021.32               0.93
                                        
 Argentina MerVal             48177.85             -0.476
                                        
 Colombia COLCAP               1177.90              -0.33
                                        
                                                         
       Currencies             Latest     Daily % change
 Brazil real                    5.1909               0.43
                                        
 Mexico peso                   22.2450               1.10
                                        
 Chile peso                      772.7              -0.34
                                        
 Colombia peso                 3685.36              -0.67
 Peru sol                       3.5338              -0.45
                                        
 Argentina peso                71.8900              -0.07
 (interbank)                            
                                        
 
        

    
 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Marguerita Choy)
  
Nuestros Estándares:Los principios Thomson Reuters
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