May 15, 2019 / 3:02 PM / 2 months ago

EMERGING MARKETS-Latam stocks, FX dip, growth concerns weigh on Brazil

    By Aaron Saldanha
    May 15 (Reuters) - Latin American currencies broadly
softened against the dollar on Wednesday and an index of Latin
American stocks slid as surprisingly weak data out of China
dented risk sentiment.        
    Data showed China's industrial output growth in April slowed
more than expected, reflecting the effects of the U.S.-China
trade war. The world's second-largest economy is a big
destination for Latin American resource exports.

    MSCI's index of Latin American currencies
fell 0.3%, while its Latin American stocks index
was 1.2% lower, after hitting its lowest level since the start
of the year.    
    The indexes recovered a little lost ground after three U.S.
administration officials told Reuters that President Donald
Trump is expected to delay a decision on tariffs on imported
cars and parts by up to six months.
    Brazil's real weakened 0.6%, while yields on local
10-year bonds rose 3 basis points to 8.84%.
    Goldman Sachs economists cut their economic growth forecasts
for Brazil, predicting Latin America's top economy shrank in the
first quarter this year and will struggle to grow much faster in
2019 than it did in each of the last two years.
    Alberto Ramos, Goldman Sachs's head of Latin American
economic research, wrote in a note that progress towards fiscal
consolidation remains "quintessential to anchor market
sentiment" and leverage what has been "so far a very shallow and
disappointing recovery."
    Investors have been closely watching the progress of a
proposal to reform Brazil's bloated pension system, which they
feel is critical to bolster the economy by trimming a yawning
fiscal deficit. 
    Brazilian stocks dropped 1.2%, weighed by losses
across the board.
    Planemaker Embraer and Kroton Educacional SA
 dived 4.2% and 6.7%, respectively, after each firm's
first-quarter results left their investors with limited cause
for optimism.
    Cia Siderurgica Nacional fell 1.5%. It said a
spillage in the steelworks of its Volta Redonda plant affected
at least 20 employees and stopped production in the affected
area.
    Common shares and preferred shares of
state-run oil firm Petroleo Brasileiro SA (Petrobras) fell 1.1%
and 0.9%, respectively.
    Mexico's peso softened marginally, while stocks
 slid 0.9%. Communication services shares contributed
handily to the benchmark's decline.
    Argentina's peso fell, while stocks rose 1.3%
on gains among financials.
    Colombia's peso declined 0.1%, as did local stocks
. 
    
    Latin American stock indexes and currencies at 1409 GMT
 Stock indexes                                        daily %
                                   Latest              change
 MSCI Emerging Markets                   1015.73         0.12
 MSCI LatAm                              2574.79         -1.2
 Brazil Bovespa                         90995.11        -1.19
 Mexico IPC                             43030.62        -0.92
 Chile IPSA                              4992.90        -0.52
                                                  
 Argentina MerVal                       32938.00         1.31
 Colombia IGBC                          12274.41        -0.14
                                                             
 Currencies                                           daily %
                                          Latest       change
 Brazil real                              4.0022        -0.67
 Mexico peso                             19.1637        -0.07
 Chile peso                                  693        -0.30
 Colombia peso                           3293.55        -0.15
 Peru sol                                  3.328        -0.18
 Argentina peso (interbank)              45.2500        -0.62
                                                  
 
 (Reporting by Aaron Saldanha in Bengaluru
Editing by Susan Thomas)
  
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