September 11, 2018 / 5:03 PM / 2 months ago

EMERGING MARKETS-Brazilian currency, equities hit by election woes

    SAO PAULO, Sept 11 (Reuters) - Brazilian equities and
currencies both slumped on Tuesday after an opinion poll on the
presidential election showed leftist candidates gaining ground
while market-friendly centrists did not.
    For months, traders had been betting that a market-friendly
candidate would emerge from the pack to win in October. A
Datafolha opinion poll released on Monday night underlined that
the window for such a development is rapidly closing. 
    Leftist candidates such as Ciro Gomes and Fernando Haddad,
the likely stand-in for former President Luiz Inacio Lula da
Silva, made progress, the poll showed. Right-wing populist Jair
Bolsonaro extended his lead marginally after surviving a near
fatal stabbing at a campaign event.
    Market-friendly centrists such as former Sao Paulo Governor
Geraldo Alckmin continued to lag, meaning a run-off will likely
occur between Bolsonaro and a leftist candidate following the
Oct. 7 election.
    Bolsonaro is likely to make it to a second round run-off,
though it is likely he will lose in a head-to-head match-up,
said Juliano Ferreira, a strategist at brokerage BGC Liquidez.
Ferreira said the momentum of Gomes and Haddad "is bringing
discomfort" to the market.
    The real currency was off 1.56 percent in afternoon
trade after earlier dropping more than 2 percent, while the
benchmark Bovespa equities index fell some 2.32 percent,
its biggest intraday loss since August.
    Preferred and common shares in state-run utility Centrais
Eletricas Brasileiras SA, known as Eletrobras, both
fell over 6 percent on an increasing likelihood that a
privatization auction for one of its units in Amazonas state
will be delayed.
    Argentine equities and the peso currency were also hit on
Tuesday, as ongoing global trade tensions, uncertainty about
that nation's 2019 fiscal budget and ongoing talks between the
government and the International Monetary Fund pushed traders to
roll back risky positions. On Tuesday, ratings agency Fitch also
warned that risks were mounting for the country.
    The peso was off 1.5 percent in afternoon trade,
while the benchmark Merval equities index fell 2.08
percent.
    
    Latin American stock indexes and currencies at 1622 GMT:
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1011.25     -1.15    -12.71
                                                  
 MSCI LatAm                    2435.08     -0.76     -13.9
                                                  
 Brazil Bovespa               74662.60     -2.32     -2.28
                                                  
 Mexico IPC                   48650.00     -0.41     -1.43
                                                  
 Argentina MerVal             28843.86     -2.08     -4.06
                                                  
 Colombia IGBC                11931.40      0.09      4.93
                                                  
 Venezuela IBC               337964.41     -0.43  26655.89
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    4.1574     -1.56    -20.30
                                                  
 Mexico peso               19.2110       -0.28        
                                                  
 Chile peso                      696.3     -0.04    -11.73
                                                  
 Colombia peso                 3078.17      0.28     -3.12
 Peru sol                        3.336     -0.12     -2.97
                                                  
 Argentina peso                37.9500     -1.50    -50.99
 (interbank)                                      
                                                  
 Argentina peso                   37.5     -0.67    -48.72
 (parallel)                                       
                                                  
 
 (Reporting by Gram Slattery and Paula Arend Laier; Additional
reporting by Jorge Otaola in Buenos Aires; editing by Grant
McCool)
  
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