February 20, 2019 / 3:46 PM / a month ago

EMERGING MARKETS-Pension reform plan in focus in Brazil, Latam currencies mixed

    By Agamoni Ghosh
    Feb 20 (Reuters) - Stocks in Brazil steadied on Wednesday as
market focus remained on the government's proposal for pension
reform, which is aimed at helping curb the country's mounting
fiscal deficit.
    Latin American currencies were mixed against a slightly
softer dollar with investors waiting for the U.S. Federal
Reserve's January policymaking minutes expected later in the
day.   
    Shares on the Bovespa index in Sao Paulo rose
marginally but losses by Engie Brasil Energia which
reported a 49.6 percent increase in net debt at the end of the
fourth quarter, capped gains on the index.
    Investors were scrutinizing details of the pension proposal
Brazilian President Jair Bolsonaro delivered to Congress which
aims to save more than 1 trillion reais ($270 billion) in 10
years for public coffers.
    The proposal predicts a sharp tightening in the granting of
welfare benefits and an increase in the social security
contribution rate for different salary ranges.
    "The pension reform is the key thing for the Brazilian
economy right now," said Christian Lawrence, senior market
strategist, LatAm FX, Rabobank. 
    The proposed reform is the cornerstone of Bolsonaro's plan
to close what rating agencies say is an unsustainable public
deficit and bolster a sluggish economic recovery.
    Currencies in the region were mixed with Brazil's real
 holding on to gains but Mexico's peso losing over
0.2 percent as oil prices slipped. 
    Investors are also on watch for the Federal Open Market
Committee (FOMC) minutes from its January meeting slated to
release at 2 pm ET (1900 GMT).  
    The minutes are expected to reaffirm the Federal Reserve's
statement last month that it would be "patient" with further
rate hikes after markets swooned late in December on fears of an
economic slowdown.  
    "Most of the dovish stance has already been factored in so
unless there is something really surprising in those minutes,
it's less likely to move the markets," said Lawrence. 
    The Chilean peso edged higher, with copper prices
helping, while stocks on the IPSA index rose over
0.4 percent led by gains in Banco De Chile.

    Key Latin American stock indexes and currencies at 1500 GMT
    
 Stock indexes                             daily %
                               Latest       change
 MSCI Emerging Markets           1050.83      1.34
                                          
 MSCI LatAm                      2902.68      0.19
                                          
 Brazil Bovespa                 97419.38      0.15
                                          
 Mexico IPC                            -         -
                                          
 Chile IPSA                      5410.15      0.44
                                          
 Argentina MerVal                      -         -
                                          
 Colombia IGBC                         -         -
                                          
                                                  
 Currencies                                daily %
                                            change
                                  Latest  
 Brazil real                      3.7181      0.23
                                          
 Mexico peso                     19.1998     -0.32
                                          
 Chile peso                       654.35      0.13
                                          
 Colombia peso                         -         -
 Peru sol                              -         -
                                          
 Argentina peso (interbank)            -         -
                                          
 

 (Reporting by Agamoni Ghosh in Bengaluru)
  
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