July 16, 2019 / 8:09 PM / 5 months ago

EMERGING MARKETS-Mexico's markets weaken as Pemex plan underwhelms

 (Updates prices)
    By Sruthi Shankar
    July 16 (Reuters) - A resurgent dollar piled pressure on
Latin American currencies on Tuesday, with the Mexican peso
leading losses as investors were disappointed by a new business
plan for debt-laden oil firm Pemex.
    The peso fell over 0.6% after Pemex          
reiterated the government would reduce taxes on the world's most
indebted oil company by some $7 billion over the next two years,
 injecting capital for a refinery and higher output.
    The much-awaited plan offered few new details, failing to
excite investors who are worried about downgrades from credit
rating agencies Moody's and S&P following Fitch's downgrade on
its debt to junk in June.
    "We believe the amounts are underwhelming, the strategy
doesn't solve the main structural problems of the company," Citi
analyst Ernesto Revilla, wrote in a client note. 
    "In our view, the probability of a downgrade to junk by
Moody's has gone higher." 
    Pemex Chief Executive Octavio Romero said a more detailed,
200-page version of the plan would be unveiled later on Tuesday.
    Mexico's main stock index dropped about 0.4%, led by
a 5% loss in broadcaster Televisa while financial
stocks also dropped.
    Other currencies in the region weakened as the dollar firmed
after a surprisingly strong U.S. retail sales numbers soothed
jitters about the American economy and trimmed expectations the
Federal Reserve may embark on a deep interest rate cut later
this month.
    Emerging market assets have benefited this year from hopes
that major central banks would embrace looser monetary policy as
global growth slows.
    Brazil's real fell 0.2%, while the Colombian
and the Chilean pesos dropped 0.4%. 
    The Argentine peso closed 0.43% lower, adding to
steep losses from Monday. Data showed consumer prices rose 2.7%
in June, marking the third straight month of deceleration amid a
more stable foreign exchange market.
    Among stocks, Brazil's Bovespa was little changed as
gains in stock exchange operator B3 SA on positive
brokerage recommendations were offset by losses in state-run oil
firm Petrobras, hit by falling oil prices.
    Stock indices in Chile and Colombia moved
higher between 0.2% and 0.6%, but Mexico's IPC index fell
marginally.  
    
Key Latin American stock indexes and currencies at 1943 GMT
    
 Stock indexes                       daily %
                            Latest    change
 MSCI Emerging Markets      1059.61     0.18
                                     
 MSCI LatAm                 2928.51    -0.45
                                     
 Brazil Bovespa           103743.38    -0.06
                                     
 Mexico IPC                42914.72    -0.35
                                     
 Chile IPSA                 5076.43     0.16
                                     
 Argentina MerVal          41801.11     1.32
                                     
 Colombia IGBC             13111.34     0.64
                                     
                                            
 Currencies                          daily %
                                      change
                             Latest  
 Brazil real                 3.7659    -0.29
                                     
 Mexico peso                19.0805    -0.58
                                     
 Chile peso                  681.37    -0.41
                                     
 Colombia peso               3198.7    -0.40
                                     
 Peru sol                     3.287    -0.12
                                     
 Argentina peso             42.6700    -0.40
 (interbank)                         
                                     
 
 (Reporting by Sruthi Shankar in Bengaluru
Editing by Alistair Bell)
  
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