EMERGING MARKETS-LatAm stocks post worst week in three months, currencies dip
(Recasts; updates stock and currency prices, adds quote) Nov 9 (Reuters) – Latin American stocks recorded their worst weekly performance in three months on Friday, with muted sentiment toward Mexico persisting a day after a senator’s proposal to cap and eliminate certain banking commissions. The proposal has tarnished investor sentiment toward Mexican President-elect Andres Manuel Lopez Obrador’s government, which has yet to take office, despite his signaling on Friday he would not support the bill. The proposal comes less than two weeks after an already started airport megaproject was scrapped following a public consultation. The MSCI index of Latin America stocks fell 0.7 percent on the day, which combined heavy losses in the previous three sessions consigned it to a 3.7 percent drop for the week. While Mexico’s benchmark stock index was little changed after retracing heavy intraday losses following Lopez Obrador’s statement on the banking bill, sentiment toward banking shares remaining cautious. Grupo Financiero Banorte SAB de CV lost 1.8 percent on the day. “The (senator’s) bill adds to the perception of market unfriendliness of the new administration, coming shortly after the airport cancellation,” wrote Dirk Willer, managing director and head of emerging market strategy at Citigroup, in a client note. “We have a bearish bias over the medium term, as (Lopez Obrador) has promised to hold more referendums, possibly over energy reform.” Mexico’s peso firmed about 0.5 percent, making up a fraction of its 1.6 percent slide on Thursday. The country’s central bank has its next meeting scheduled in less than a week’s time. Juan Carlos Alderete, a senior economist for Mexico with Banorte said he expects the central bank to raise rates by 25 basis points to 8 percent, citing factors including higher upside risks to inflation and the high volatility involved in the peso’s recent weakness. Regional foreign exchange markets fared only slightly better, but a firming in Brazil’s real on incoming President Jair Bolsonaro’s comments on pension reform held the MSCI index of Latin America currencies from declining more than 0.6 percent. The right-wing politician said he would like to see some form of pension reform, much watched for among investors, passed this year to make it easier to deal with the fiscal deficit after he takes office on Jan. 1, 2019. The Bovespa index was flat as gains among financial stocks were largely negated by losses in materials with iron ore miner Vale falling 4.2 percent. In Argentina, the peso firmed about 0.2 percent, with traders ascribing the modest move to the central bank adjusting minimum cash balances to curb speculation in the currency.
However, local stocks fell about 2.7 percent on broad-based losses, as the overhang of a decline on Wall Street sent the benchmark to its lowest in more than a week and a half. Chile’s stocks benchmark fell 0.9 percent, as all but four stocks on the benchmark declined.
Key Latin American stock indexes and currencies at 1625 GMT
Stock indexes Latest Daily YTD pct pct change
MSCI Emerging Markets 976.17 -1.75 -15.73 MSCI LatAm 2,624.13 -0.71 -7.21 Brazil Bovespa 85,641.21 0.02 12.09 Mexico IPC 44,177.28 -0.03 -10.49 Chile IPSA 5,180.35 -0.9 -0.90 Argentina MerVal 29,912.49 -2.68 -0.51 Colombia IGBC 12,355.36 -0.62 8.66 Currencies Latest Daily YTD pct pct change
Brazil real 3.7339 0.04 -11.26 Mexico peso 20.0945 0.50 -1.97 Chile peso 684.5 -1.05 -10.20 Colombia peso 3,178.5 -0.86 -6.18 Peru sol 3.37 -0.18 -3.95 Argentina peso 35.3800 0.34 -47.43
(Reporting by Aaron Saldanha in Bengaluru, editing by G Crosse)