May 13, 2019 / 9:13 PM / a month ago

EMERGING MARKETS-Latam assets slide as U.S.-China trade war froths

 (Recasts throughout, updates prices, adds market strategist's
quote)
    By Aaron Saldanha
    May 13 (Reuters) - Latin American currencies softened
against the dollar on Monday, with global risk appetite hammered
by rising U.S.-China trade tensions, which prompted some
investors in Latin American stocks to cash out their chips in a
rush.
    China plans to impose higher tariffs on $60 billion worth of
U.S. goods it would target, the latest salvo in the top two
economies' trade war.    
    The yuan hit its lowest level against the dollar
since December, setting a broadly negative tone for emerging
markets currencies against the greenback.
    MSCI's index of Latin American currencies
dipped 0.5%, while its Latin American stocks index
 dived 2.6% to a 5-1/2-month low.
    Mexico's peso softened 0.7%, the smallest decline
among its regional peers. Stocks slid 0.6%.
    Banco de Mexico (Banxico) meets later this week and many
market participants expect rates to remain at 8.25%. 
    "If you are holder of Cetes (Mexican Treasury certificates),
you're locking in really good interest rates and then there's
the prospect for them (Banxico) to ease maybe over the summer,"
said Marc C. Chandler, chief market strategist at Bannockburn
Global Forex.
    "It's a really interesting play and I think it's a cash
register for a lot of hedge funds and I think they are reluctant
to give it up. For me, even if the peso weakens up to 19.50, at
that price there will still be buyers." 
    Brazil's real weakened 0.8%, while stocks on the
Bovespa dropped 2.7% on broad-based losses.  
    Against a backdrop of lower oil prices, common
shares and preferred shares of state-run
oil firm Petroleo Brasileiro SA (Petrobras) slid 2.9% each.

    Petrobras is not planning on selling any refining assets
beyond the refineries it has already publicly slated for
divestment, an executive wrote to employees last week.

    Iron ore mining giant Vale SA shed 4.1%. China is
an important market for the firm's exports of the steel making
ingredient.  
    Petrochemical producer Braskem SA dived 7%. The
New York Stock Exchange will start a delisting process for
Braskem's U.S.-listed shares, the firm said, after it failed to
file its 2017 annual report on time.
    Chile's peso fell 1.1%, following lower prices of
Chile's top export, copper. China is the world's top
importer of the metal.    
    Argentina's stocks benchmark tumbled 3.3%, while the
peso softened as investors shirked riskier positions. 
    
    Latin American stock indexes and currencies at 2049 GMT
    
 Stock indexes                                    daily %
                                      Latest       change
 MSCI Emerging Markets                  1016.49     -1.64
 MSCI LatAm                             2586.16     -2.64
 Brazil Bovespa                        91726.54     -2.69
 Mexico IPC                            43142.46     -0.55
 Chile IPSA                             4969.82      -1.6
                                                 
 Argentina MerVal                      32300.25     -3.27
 Colombia IGBC                         12363.24     -2.36
                                                         
 Currencies                                       daily %
                                                   change
                                         Latest  
 Brazil real                             3.9990     -0.54
 Mexico peso                            19.2340     -0.72
 Chile peso                               693.4     -1.14
 Colombia peso                          3302.98     -0.93
 Peru sol                                 3.327     -0.36
 Argentina peso (interbank)             45.0900     -0.42
                                                 
 
    

 (Reporting by Aaron Saldanha in Bengaluru; editing by Grant
McCool)
  
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