December 24, 2018 / 10:09 PM / in 25 days

EMERGING MARKETS-Latam currencies stable vs soft dollar, stocks dip in quiet trade

 (Advisory: There will be no Latam-focused emerging markets
report on Tuesday due to the Christmas holiday. Reuters will
resume coverage on Wednesday. Recasts, updates prices, adds
comment by market strategist.)
    By Aaron Saldanha
    Dec 24 (Reuters) - Latin American currencies maintained an
even keel against a softer dollar on Monday while regional
stocks reflected the weakness prevalent in markets across the
globe, sinking to their lowest closing level in two weeks.
    U.S. President Donald Trump renewed his criticism of the
U.S. Federal Reserve, tweeting the central bank was the "only
problem" for the U.S. economy.
    Concerns about a prolonged U.S. government shutdown softened
the dollar and helped set the stage for general stability in
Latin American currencies, which weathered cautious risk
sentiment toward the region.
    MSCI's benchmark tracking Latin American stocks
 declined half a percent to a two-week closing
trough. 
    Mexico's main stocks index fell 0.2 percent but its 
peso firmed 0.4 percent, supported by news the country's
congress approved the budget for 2019 presented by new President
Andrés Manuel López Obrador's government.
    However, there was little liquidity in trade in the currency
of Latin America's second-largest economy, with Refinitiv Eikon
data showing volumes were only about 20 percent of the average
over the past week. 
    Colombia's peso was little changed but the country's
stocks benchmark slid 1 percent to clock its lowest
closing level in more than a year.
    Oil firm Ecopetrol SA dropped 4.3 percent on Monday
as global oil prices slid more than 6 percent on fears
of an economic slowdown.
    Ecopetrol's stock has sunk about 38.6 percent this quarter
so far, following close on the heels of a more than 40 percent
tumble in oil prices over the same period. 
    Chile's peso snapped a seven-session losing run,
strengthening about half a percent, while the country's equities
benchmark slid 0.6 percent.
    Emerging markets have been pummeled in 2018, with rising
U.S. interest rates making dollar assets relatively more
attractive than previously. That, combined with the bruising
U.S.-China trade war, has prodded capital into perceived safer
harbors in the developed world. 
    However, the significant sell-off in emerging market assets
has tempted some investors to return to probe cautiously for
pockets of value.
    "We view emerging markets as oversold and under-owned," said
David Woo, head of global rates, FX and fixed income strategy
and economics research at BofA Merrill Lynch, in the firm's
outlook for 2019 earlier this month.
    "However, we are waiting until the U.S.-China trade war has
been fully resolved before turning more constructive on emerging
markets."
    Financial markets in Brazil and Argentina were closed on
Monday for Christmas Eve and Latin American markets will be
closed on Tuesday for Christmas.         
    
    Key Latin American stock indexes and currencies at 2122 GMT
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets          952.84     -0.47    -17.75
                                                  
 MSCI LatAm                    2509.49     -0.48    -11.27
                                                  
 Mexico IPC                   41380.11     -0.21    -16.16
                                                  
 Chile IPSA                    5030.73     -0.64     -0.64
                                                  
 Colombia IGBC                10908.20     -0.96     -4.07
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Mexico peso                   19.8685      0.36     -0.85
                                                  
 Chile peso                      692.1     -0.01    -11.19
                                                  
 Colombia peso                  3291.5      0.02     -9.40
 
    
 (Reporting by Aaron Saldanha in Bengaluru
Editing by Matthew Lewis)
  
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