May 29, 2019 / 7:59 PM / 6 months ago

EMERGING MARKETS-Latam FX firms, Brazil's real stars on c.bank chief's comments

 (Recasts throughout, updates prices, adds market strategist's
quote)
    By Aaron Saldanha
    May 29 (Reuters) - Latin American currencies firmed against
the dollar on Wednesday, led by gains in Brazil's real, while a
Latin American stocks benchmark hit a more than
two-and-a-half-week high, aided by strong gains in Mexico.   
    While strength among most regional currencies was modest,
Brazil's real was the day's outlier as the central bank's
president unveiled a slew of proposals to simplify regulations
and make financial markets more accessible.
    MSCI's index of Latin American currencies
gained 0.8%, while its Latin American stocks index
 rose 1.1% on the back of gains among equities in
Mexico, whose shares have the second highest weighting in the
index.
    The real firmed 1.1% in its best performance in more than a
week. The president of the Brazilian central bank, Roberto
Campos Neto, said the country aims to make the currency fully
convertible within two to three years, in an effort to lower the
cost of cross-border trade and investment.
    The monetary authority will propose changes to exchange rate
legislation in the near future, he said, adding there was work
to be done to reduce the cost of capital and tighten credit
spreads. 
    Yields on Brazilian local 10-year bonds fell as
much as 18 basis points to 8.46%, their lowest level in at least
12 years, according to Refinitiv Eikon data, before rising
slightly. 
    The yield spread - or surplus yield - between Brazilian
local 10-year bonds over their U.S. peers
 hit its lowest tmsnrt.rs/2I4V0Gt level in
more than two months during the session.    
    "Local bond markets are doing okay, growth is not firing on
all cylinders anywhere in the world, as a result, it's good for
nominal bonds," said Antoine Lesne, EMEA head of SPDR ETF
research and strategy.              
    Brazil posted a primary budget surplus of 6.54 billion reais
 ($1.64 billion) in April, the Treasury said, lower than
expected and less than the same month last year due to a
widening social security deficit.
    The Bovespa fell 0.2%, weighed on by losses among
consumer staples, materials and energy stocks.
    Common shares and preferred shares of
state-run oil firm Petroleo Brasileiro SA (Petrobras) fell 0.9%
and 1%, respectively, hurt by a 1.1% decline in Brent crude
futures.
    Miner Vale SA fell 1.4%, with Dalian-traded iron
ore futures having slid earlier in the global day as transaction
fees for some futures contracts were raised.
    Mexican stocks rose 1%, largely on gains among
consumer staples and materials, while the peso
strengthened 0.2%.
    Shares of telecommunications giant America Movil SAB de CV
 were set for their first daily gain this week, trading
up 2.2%.     
    Argentina's equities declined 2.6%, under pressure
from energy stocks and financials, while the country's peso
 firmed about 0.5%.
    
    Latin American stock indexes and currencies at 1913 GMT
    
 Stock indexes                          daily
                                            %
                             Latest    change
 MSCI Emerging Markets         985.58   -0.26
                                       
 MSCI LatAm                   2645.69    1.07
                                       
 Brazil Bovespa              96192.46   -0.21
                                       
 Mexico IPC                  42614.06    0.96
                                       
 Chile IPSA                   4863.28    1.35
                                       
 Argentina MerVal            33761.86   -2.55
                                       
 Colombia IGBC               12034.67    1.32
                                       
                                             
 Currencies                             daily
                                            %
                                       change
                               Latest  
 Brazil real                   3.9788    1.12
                                       
 Mexico peso                  19.1520    0.21
                                       
 Chile peso                     704.8    0.31
                                       
 Colombia peso                 3350.3    0.73
 Peru sol                       3.355   -0.06
                                       
 Argentina peso (interbank)   44.4200    0.61
                                       
 


($1 = 3.9768 reais)

    
 (Reporting by Aaron Saldanha in Bengaluru
Editing by Leslie Adler)
  
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