Bonds News

EMERGING MARKETS-Brazil's real at record low as coronavirus fears rattle Latam assets

    * Real eyes worst month since August, potentially oversold
    * Mexican peso eyes mild monthly gains
    * Composite Latam stock, currency indexes at 1-mth lows

 (Adds details, updates prices)
    By Ambar Warrick
    Jan 31 (Reuters) - Brazil's real hit a record low on Friday,
while risk assets across Latin America were sold down as
investors were harried  by the declaration of the China
coronavirus outbreak as a global health emergency.
    The coronavirus epidemic, which has caused widespread
disruption across China and claimed over 200 lives, was declared
a global emergency on Thursday by the World Health Organization,
in the wake of its spread to several other countries.

    The move created further uncertainty over the economic
fallout in the world's second largest economy, which is also a
major export destination for Latin America. Composite regional
stock and currency indexes
touched over one month lows. 
    "The current weakness in Latin American markets has been
driven by risk-off sentiment surrounding the coronavirus in
China and neighboring countries, which has hit sentiment, pushed
down commodity prices, and now may be starting to disrupt supply
chains," said John Ashbourne, senior emerging markets economist
at Capital Economics. 
    Brazil's real weakened as much as 1% to 4.286, its
weakest level ever against the dollar. 
    The currency, which was set for its worst month in six, was
further pressured by expectations of an interest rate cut by
Brazil's central bank next week, which will push rates further
into record-low territory.  
    "The main sign that (the real) could be oversold is a strong
devaluation since the coronavirus outbreak," said Wilson
Ferrarezi, economist at TS Lombard in Sao Paulo, adding that
predictions of the rate cut were also making Brazil's currency
less attractive as a carry trade.
    The Brazilian stock index was on course for its
first monthly decline in five, shedding about 1.6% for the day.
    The Mexican peso, which has recently garnered
attention as a possible alternative to the real for carry trade,
weakened about 0.5%. The currency was also set to log small
gains for the month.
    Mexico maintained its economic growth forecast of 2% for
2020, after seeing its economy shrink in 2019, its first
recession in a decade. 
    Mexican stocks fell more than 1%.
    The Chilean peso touched its weakest level to the
dollar in nearly two months, as prices of copper, the country's
top export, remained near five-month lows on worries about
demand from its top consumer, China.
   Data showed Chilean manufacturing production rose for a
second straight month in December, bucking dire predictions of a
slump in output following nearly two months of protests.

    Chile's stock index added about 0.5%.
    Argentine assets dropped as the country's government gave a
Feb. 3 deadline for bondholders to accept its proposal to
postpone a $250 million sovereign debt repayment.
    Key Latin American stock indexes and currencies at 1900 GMT
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets         1060.55                -1.14
 MSCI LatAm                    2750.24                -1.82
 Brazil Bovespa              113680.12                 -1.6
 Mexico IPC                   44244.09                -1.38
 Chile IPSA                    4574.31                 0.51
 Argentina MerVal             39877.69               -1.281
 Colombia COLCAP               1631.49                -0.41 Currencies             Latest      Daily % change
 Brazil real                    4.2838                -0.61
 Mexico peso                   18.8630                -0.48
 Chile peso                      799.1                -0.35
 Colombia peso                    3417                -0.23
 Peru sol                        3.384                -0.56
 Argentina peso                60.3400                -0.15

 (Reporting by Ambar Warrick and Sagarika Jaisinghani in
Editing by Alistair Bell)