August 26, 2019 / 7:48 PM / 3 months ago

EMERGING MARKETS-Latam assets slump on trade tensions; Brazil's real near 1-year low

 (Updates prices, adds quote)
    * Brazilian real touches near 1-year low
    * Latam stocks and currencies at 2019 lows
    * IMF team to meet Fernandez advisors in Argentina  

    By Agamoni Ghosh
    Aug 26 (Reuters) - Latin American stocks and currencies fell
on Monday as investors fled from riskier assets on fears an
escalation in the U.S.-China trade war will inflict further
damage on global growth.
    U.S. President Donald Trump said Chinese officials had
contacted Washington about resuming trade negotiations, after
signs of escalation in the U.S.-China trade dispute had roiled
markets since Friday.   
   Although equity markets in Europe and the United States
managed to stave off the pessimism from the underlying trade
tensions, MSCI's index of Latin American stocks
slumped over 2%, as sentiment still remained shaky, forcing
investors to avoid risky emerging market assets.
    "EM markets have burned a couple of times this year due to
trade tensions and investors are much more skeptical now," said
Win Thin, global head of emerging market strategy at Brown
Brothers Harriman.  
    "They (U.S. and China) are only talking at this point, but
in terms of a deal, really don't see one until 2020."
    Currencies in the region were also hit as the greenback
gained some strength after the world's two largest economies
attempted to ease trade war tensions.
    Brazil's real slipped 0.7%, trading at nearly
one-year lows as the bout of trade rhetoric as well as weak
economic signals pressured the currency.  
    Data showed Brazil's balance of payments position with the
rest of the world deteriorated sharply in July, as the current
account deficit unexpectedly ballooned to $9 billion. 
    Further, inflation expectations for Latin America's largest
economy this year and next fell to new lows, strengthening the
view that the central bank will cut interest rates again this
year.
    Sao Paulo stocks fell over 1% in broad-based
declines across sectors but payment processor Cielo SA
 moved higher after the company said it will launch
digital banking services in October, challenging the country's
long-established bric and mortar banks.
    Mexican stocks were among the few gainers, climbing
0.3%, while the peso was marginally higher. 
    Chile's peso was mostly flat, while stocks on the
SPIPSA index slid 0.6%.  
    Argentina's peso closed 0.2% lower with focus on a
meeting between the representatives of International Monetary
Fund and economic advisers to opposition candidate Alberto
Fernandez, the frontrunner for October's presidential election.
     Fernandez, a critic of Argentina's $57 billion IMF standby
agreement negotiated in 2018 by pro-reform President Mauricio
Macri, has pledged to "rework" the program if elected.


 Key Latin American stock indexes and currencies at 1930 GMT
 Stock indexes                                 daily %
                          Latest                change
 MSCI Emerging Markets              960.68       -1.33
                                            
 MSCI LatAm                        2469.42       -2.48
                                            
 Brazil Bovespa                   96233.97       -1.47
                                            
 Mexico IPC                       40028.85        0.32
                                            
 Chile IPSA                        4618.37       -0.65
                                            
 Argentina MerVal                 26069.79      -1.942
                                            
 Colombia IGBC                    12363.52        0.56
                                            
                                                      
 Currencies                                    daily %
                                    Latest      change
 Brazil real                        4.1503       -0.66
                                            
 Mexico peso                       19.9080        0.02
                                            
 Chile peso                            719       -0.11
                                            
 Colombia peso                        3431       -0.28
 Peru sol                            3.382       -0.21
                                            
 Argentina peso                    55.2900       -0.18
 (interbank)                                
                                            
 

 (Reporting by Agamoni Ghosh in Bengaluru; Editing by Cynthia
Osterman)
  
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