September 5, 2018 / 12:19 AM / 22 days ago

EMERGING MARKETS-Brazil real trims losses after leftist candidate charged; Argentine peso slips

 (Updates with final numbers, details from Argentina)
    By Bruno Federowski
    BRASILIA, Sept 4 (Reuters) - The Brazilian real erased early
losses on Tuesday after state prosecutors charged Workers Party
vice presidential candidate Fernando Haddad with corruption,
driving investors to pare bets on his electoral strength.
    Elsewhere, currencies in the region slipped as global trade
fears sapped risk for emerging market assets, and Argentina's
peso remained under pressure despite efforts by its government
to win financing from the International Monetary Fund.
    Brazil's Haddad is likely to replace incarcerated former
President Luiz Inácio Lula da Silva in the ballot after an
electoral court blocked him from running after being convicted
for graft.
    Haddad's candidacy is not in danger of being blocked, as it
would be virtually impossible for a trial to play out before the
country's elections next month.
    Lula, who has led opinion polls, has railed against
austerity and investors believe he is unlikely to pursue
spending cuts or privatizations necessary to bring back Brazil's
investment grade sovereign rating even if he were elected.
    The Brazilian real turned flat after the charge
against Haddad, moving away from the emerging-market rout that
hit currencies from Chile, Mexico, Colombia and Argentina.
    The sell-off also ravaged local debt markets, driving an
exchange-traded fund modeled on JPMorgan's local emerging-market
debt index to a record low.
    Stock markets across the region also suffered. Brazil's
Bovespa dipped almost 2 percent, while Argentina's
MerVal plunging more than 4 percent.
    Argentina's peso closed down by more than 2
percent in spite of U.S. President Donald Trump's backing
Argentine President Mauricio Macri's handling of an economic
crisis, and his efforts to win IMF financing.
    Trade tensions have rattled global and emerging markets,
with fears rising again after Trump's announcement over the
weekend that there was no need to keep Canada in the North
American Free Trade Agreement. 
    This followed a report that Trump was prepared to ramp up a
trade war with China and could be ready to impose more tariffs
on Chinese imports as soon as Thursday.
    
    Key Latin American stock indexes and currencies at 2330 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
                                  Latest               
 MSCI Emerging Markets              1040.17     -0.66   -10.21
 MSCI LatAm                         2387.97      -2.3   -15.56
 Brazil Bovespa                    74711.80     -1.94    -2.21
 Mexico IPC                        48884.17     -1.22    -0.95
 Chile IPSA                         5173.96     -1.21    -7.03
                                                       
 Argentina MerVal                 27625.350      -4.1    -8.12
 Colombia IGBC                     12216.77     -0.03     7.44
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                     Latest            
 Brazil real                         4.1531     -0.03   -20.22
 Mexico peso                        19.3985     -1.08     1.55
                                                       
 Chile peso                           692.7     -1.18   -11.27
 Colombia peso                      3094.45     -1.58    -3.63
 Peru sol                             3.318     -0.58    -2.44
 Argentina peso (interbank)          38.875     -2.18   -52.15
                                                       
 
 (Reporting by Bruno Federowski; Editing by Dan Grebler and
Leslie Adler)
  
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