August 24, 2017 / 8:05 PM / a month ago

EMERGING MARKETS-Brazil stocks up on gov't asset-sale plan

 (Updates prices)
    By Bruno Federowski
    SAO PAULO, Aug 24 (Reuters) - Brazilian stocks rose on
Thursday after a government council announced a massive sale of
state assets, fueling bets that the government will manage to
rein in the growth of public debt and cut a widening budget gap.
    Brazil intends to sell stakes in some of the country's
busiest airports as well as oil exploration, highway and power
dam licensing rights as President Michel Temer seeks to reduce
state involvement in the economy.
    The announcement followed a surprise move on Tuesday to
privatize state-controlled power utility Centrais Elétricas
Brasileiras SA, which triggered a market-wide rally.

    Brazil's benchmark Bovespa stock index rose about 1
percent to a new six-year high, with shares of Eletrobras
, as the power utility is known, among the biggest
gainers.
    Also helping fuel optimism was a decision by the lower house
of Congress to approve the main text of a bill creating a new
market-based lending benchmark for state development bank BNDES
           that would greatly reduce discretionary subsidies.

    "Coupled with well-behaved inflation, this sets the stage
for the central bank to cut interest rates even more," analysts
at the Magliano brokerage wrote in a client note.
    The Mexican peso traded nearly flat, down about .2
percent, after Mexico and Canada dismissed U.S. President Donald
Trump's threats to scrap NAFTA, which had wreaked havoc in local
markets the day before, as a negotiating tactic.
    Yields paid on Mexican interest-rate futures rose after
minutes from the central bank's last rate-setting meeting showed
policymakers remained cautious with rising inflation, suggesting
rate cuts may be farther off than expected.
    "The discussion among directors was biased toward the need
to remain vigilant and ready to protect the integrity of the
inflation targeting framework, rather than laying out the case
for near-term rate cuts," Goldman Sachs' economists wrote in a
report.
    Mexican inflation was higher than expected in the first half
of August, keeping pressure on the central bank to maintain high
borrowing costs.    
    
    Key Latin American stock indexes and currencies at 1938 GMT:
    
    
 Stock indexes                                daily %      YTD %
                               Latest          change     change
 MSCI Emerging Markets             1082.53       0.64      24.74
                                                       
 MSCI LatAm                        2886.84       0.95      22.18
                                                       
 Brazil Bovespa                   71158.88       0.97      18.15
                                                       
 Mexico IPC                       51456.80       0.34      12.74
                                                       
 Chile IPSA                        5152.80       0.49      24.12
                                                       
 Chile IGPA                       25725.99       0.44      24.08
                                                       
 Argentina MerVal                 23366.89       0.45      38.12
                                                       
 Colombia IGBC                    10892.63      -0.75       7.55
                                                       
 Venezuela IBC                   199748.94        0.8     530.02
                                                       
                                                                
 Currencies                                   daily %      YTD %
                                               change     change
                                    Latest             
 Brazil real                        3.1447      -0.11       3.32
                                                       
 Mexico peso                       17.7230      -0.22      17.05
                                                       
 Chile peso                          637.6       0.40       5.19
                                                       
 Colombia peso                     2960.05       0.67       1.40
 Peru sol                            3.237       0.00       5.47
                                                       
 Argentina peso (interbank)        17.1900       0.29      -7.65
                                                       
 Argentina peso (parallel)           18.21       0.49      -7.63
                                                       
 
 (Reporting by Bruno Federowski; Editing by Sandra Maler)
  

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