July 16, 2020 / 3:10 PM / 19 days ago

EMERGING MARKETS-Latam FX, stocks fall on U.S.-China, virus risks

    By Shreyashi Sanyal
    July 16 (Reuters) - Most stocks and currencies in Latin
America declined on Thursday, as souring relations between the
United States and China and surging cases of the COVID-19 drove
investors out of riskier assets. 
    Hurting sentiment further was data which showed unexpected
weakness in China's domestic consumption, which underscored the
need for more policy support to bolster the recovery. However,
China's economy returned to growth in the second quarter after a
deep slump at the start of the year.
    China is one of the biggest importers of agricultural
products and metals from Latin America, with investors closely
watching headlines about the country.  
    Geopolitical risks were heightened after the White House
said on Wednesday it had not ruled out further sanctions on top
Chinese officials to punish China for its handling of Hong Kong.

    The United States also said it was studying the national
security risks of social media applications including China's
TikTok and WeChat. 
    MSCI's index for Latin American stocks fell
1%, but was still on track for a weekly gain as investors were
optimistic about signs of development of a coronavirus vaccine
by Moderna Inc.
    Cases continued to surge in South America, with Mexico
reporting 6,149 new confirmed coronavirus infections on
Wednesday and 579 additional fatalities, bringing the total in
the country to 317,635 cases and 36,906 deaths.
    Agricultural exports to China have also been impacted as
Argentina suspended exports to China from eight meatpacking
plants and the Chinese government asked Brazil to suspend
exports from two meat plants over coronavirus concerns.

    The Mexican peso was rangebound on Thursday, with
investors keeping a close watch on oil prices. 
    In Brazil, Economy Minister Paulo Guedes said on Wednesday
that his team is studying reducing taxes and encouraging
informal workers to file tax returns by granting them up to a
20% bonus over their earnings, what he called a "negative tax."

    The real firmed against the dollar.     
    Chilean markets were shut on Thursday due to a public
holiday. On Wednesday, Chile's central bank kept its benchmark
interest rate steady at 0.5% as per market expectations.
    Key Latin American stock indexes and currencies;
    Stock indexes             Latest     Daily %
 MSCI Emerging Markets         1046.67      -1.84
 MSCI LatAm                    1988.06      -0.96
 Brazil Bovespa              100758.09      -1.01
 Mexico IPC                   36381.19      -0.57
 Chile IPSA                    4041.62      -3.33
 Argentina MerVal             44941.53     -0.397
 Colombia COLCAP               1146.57       0.15
       Currencies             Latest     Daily %
 Brazil real                    5.3405       0.79
 Mexico peso                   22.2859       0.16
 Chile peso                        781       0.00
 Colombia peso                 3624.15      -0.26
 Peru sol                       3.4948      -0.03
 Argentina peso                71.4100      -0.07
 Argentina peso                    124       2.42

 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Alistair Bell)
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