August 9, 2019 / 7:52 PM / 2 months ago

EMERGING MARKETS-Latam FX, stocks down; Argentine stocks surge ahead of primary vote

 (Updates prices)
    By Susan Mathew
    Aug 9 (Reuters) - Most Latin American currencies were set to
end a tumultuous week on a soft note on Friday as worries about
the U.S.-China trade dispute and global growth kept investors on
edge.
    The Brazilian real fell about 0.5%, giving back some
of Thursday's gains of more than 1% when upbeat trade data from
China and a stabilizing yuan lifted risk appetite. 
    The mood was glum again on Friday after U.S. President
Donald Trump said that he was not ready to make a trade deal
with China and had decided that the United States would not do
business with Chinese telecoms giant Huawei Technologies for the
time being.
    "At this point in time, it's hard to see either the U.S. or
China having enough will to resolve their differences, much less
before the new U.S. tariffs on Chinese goods kick in on
September 1," said Han Tan, market analyst at FXTM.
    "Should the barriers to global trade be raised next month,
that would be another kick in the gut for risk appetite and may
prompt another sell-off in risk assets."
    MSCI's index of emerging market stocks as well as
currencies were set to post a third straight week of losses.
    Argentina's main stock index shot up 7% as investors
adjusted investment portfolios ahead of the country's primary
election on Sunday, which will determine President Mauricio
Macri's chances of winning a second term in October.

    The country's embattled peso, which has shed over 8%
in the past month, is expected to take another beating next week
if the business-friendly Macri fares worse than expected.
    Sao Paulo-listed shares erased early gains as miner
Vale fell 3.2 % due to a plunge in iron ore prices.

    However, a 5.8% jump in shares of food processor BRF SA
 on swinging back to quarterly profit, and a near 33%
surge in healthcare insurer Qualicorp SA after
private hospital group Rede D'Or Sao Luiz agreed to buy a 10%
stake in the company, boosted the main index.
    After Brazil's pension reform bill was passed in the lower
house of Congress on Wednesday, investors are awaiting a vote in
the Senate, which is expected to consider extending the reform
to states and municipal governments.
    "We expect the pension reform discussion to conclude before
October this year, and we don't expect much watering down in the
proposal either," said Wilson Ferrarezi, an economist at TS
Lombard. 
    From a markets points of view the reform has cleared its
major hurdle when it was approved by the Lower House, he said.
But volatility might still remain high as the focus will likely
shift to other reforms such as the passage of the tax reform,
which he expects to be long drawn out.
    The Mexican peso and stocks held largely
steady after data showed industrial output rose 1.1% in June,
rebounding from a contraction in the previous month.
 
    
    Key Latin American stock indexes and currencies at 1930 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets          980.95     -0.34
                                        
 MSCI LatAm                    2766.95     -0.06
                                        
 Brazil Bovespa              103821.93     -0.28
                                        
 Mexico IPC                   40436.57     -0.01
                                        
 Chile IPSA                    4934.76       0.5
                                        
 Argentina MerVal             44257.47         7
                                        
 Colombia IGBC                12544.33      -0.2
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.9402     -0.36
                                        
 Mexico peso                   19.4142     -0.05
                                        
 Chile peso                      711.1     -0.32
                                        
 Colombia peso                  3394.5     -0.83
 Peru sol                         3.38     -0.21
                                        
 Argentina peso                45.2500      0.09
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru
Editing by Sonya Hepinstall)
  
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