April 30, 2020 / 2:45 PM / a month ago

EMERGING MARKETS-Latam stocks, FX set to lag emerging market peers in April

    * Stocks and FX fall on the day amid further risk aversion
    * Mexican economy marks worst qtrly contraction since 2009
    * Brazil's real to underperform regional peers
    * Chilean, Colombian pesos to gain for the month

    By Ambar Warrick
    April 30 (Reuters) - Latin American currencies dropped on
Thursday, and were set to end the month lower as continued signs
of economic damage from the coronavirus outbreak added to
concerns over stability in regional economies. 
    Brazil's real and Mexico's peso fell about
1.6% and 0.8%, respectively. Latin American currencies were also
seen underperforming over the month in comparison to their
emerging market peers.
    The MSCI's index of regional currencies was set to fall 2.5%
in April, while a broader index of developing world currencies
 was set to add 0.6%.
    Latin American stock markets retreated for the day. Like
currencies, they were set to underperform their broader emerging
market peers in April.
    The MSCI's index of regional stocks eyed a
6.5% gain in April, while an index of broader developing world
stocks was set to add 9.3%. 
    A swathe of weak economic data from the developed world had
bought with it fresh risk aversion, adding to existing concerns
that many Latin American economies lacked the fiscal strength to
combat the coronavirus. 
    Data showed Mexico's economy was set to mark its sharpest
quarterly contraction since 2009, although the preliminary
figures were slightly better than expected.
    "Mexico stands to suffer the severest slow-down in Latin
America and it looks as though Banxico is now ready to favour
growth over currency stability," ING analysts wrote in a note.
    Brazil's real was set for its worst day in more than
a week. The currency also underperformed its regional peers for
the month, having recently sunk into record-low territory as
political uncertainty in the country added to concerns over the
economic shock of the virus.
    The unemployment rate in Latin America's largest economy
rose to 12.2% in the three months to March, its biggest rise in
three years, even as the full impact of the coronavirus was yet
to be reflected.
   "President Jair Bolsonaro’s handling of the economy and
cabinet departures have added a political risk premium to the
BRL, which may remain embedded during 2Q20," ING analysts wrote.
    Brazilian stocks fell nearly 2%, dragged lower by a
more than 5% drop in Banco Bradesco SA, one of the
country's largest lenders.
    The bank's first-quarter profit missed expectations, while
its provisions for expected loan losses soared. 
    Mexican and Chilean stocks fell more than
1% each. 
    On the other hand, the Chilean and the Colombian
 pesos were set to gain for the month. 
    Regional markets will be closed on Friday for labor day.
    Key Latin American stock indexes and currencies at 1414 GMT
    Stock indexes             Latest       Daily % change
 MSCI Emerging Markets          927.10                   0.81
                                        
 MSCI LatAm                    1678.31                  -1.83
                                        
 Brazil Bovespa               81638.38                  -1.84
                                        
 Mexico IPC                   36456.04                  -1.12
                                        
 Chile IPSA                    3972.18                  -1.06
                                        
 Argentina MerVal                    -                      -
                                        
 Colombia COLCAP               1145.66                  -0.02
                                        
                                                             
       Currencies             Latest       Daily % change
 Brazil real                    5.4368                  -1.55
                                        
 Mexico peso                   23.9170                  -0.75
                                        
 Chile peso                      839.3                  -0.54
                                        
 Colombia peso                 3921.94                  -0.07
 Peru sol                       3.3657                   0.00
                                        
 Argentina peso                66.8300                  -0.12
 (interbank)                            
                                        
 
 (Reporting by Ambar Warrick in Bengaluru
Editing by Alistair Bell)
  
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