July 2, 2018 / 11:49 PM / a year ago

EMERGING MARKETS-Mexico stocks sink, peso dips after leftist's win

 (Adds analyst comment)
    SAO PAULO/MEXICO CITY, July 2 (Reuters) - Mexico's stock
market sank on Monday and the peso slid after leftist
presidential candidate Andres Manuel Lopez Obrador handily won
election while his allies picked up a significant number of
congressional seats.
    Mexico's benchmark stock index shed more than 2
percent, its steepest one-day drop in nearly five months, after
Lopez Obrador on Sunday won with the widest margin in a
presidential election since the 1980s.
    The 64-year-old former Mexico City mayor's victory was
widely priced in by markets, but an apparent
better-than-expected showing in congressional races for his
leftist party has put investors on edge.
    Mexico's peso weakened slightly, but its losses
were less than other emerging market currencies as the dollar
broadly gained with a safe-haven bid amid mounting global trade
tensions and political developments in Europe.
    Sergio Luna, an economist at Citigroup unit Banamex, noted
it was surprising there was not more selling with such a big
political shift. But he noted that investors would be wary to
see how Lopez Obrador's economic policy plans develop.
    "He has the benefit of the doubt for now, but the market
will need to see more granularity on his proposals," Luna said.
"There is still an element of suspicion and he needs to address
    Carlos Urzua, Lopez Obrador's pick to be his finance
minister when he takes office on Dec. 1, has moved to mollify
investor concerns, holding a conference call on Monday. 
    Urzua told Reuters in an interview that Lopez Obrador
supports ideas such as creating a fiscal committee for prudent
economic management, reform of pensions and cost-cutting at
state-owned oil firm Pemex.
    In his victory speeches, Lopez Obrador said he would respect
central bank independence and talks on the North American Free
Trade Agreement, among other things.
    "The conciliatory tone of Andres Manuel Lopez Obrador after
his convincing victory in the presidential elections has been
relatively well received by the markets," said Capital Economics
in a report. 
    "But it's worth warning that we still have little clarity
about his economic policies."   
    Latin American stock indexes and currencies at 2055 GMT: 
 Stock indexes                                daily %   YTD %
                                               change  change
 MSCI Emerging Markets              1059.32     -0.95   -8.56
 MSCI LatAm                         2421.24     -2.25  -14.39
 Brazil Bovespa                    72839.74      0.11   -4.66
 Mexico IPC                        46653.52     -2.12   -5.47
 Chile IPSA                         5301.25      0.83   -4.73
 Chile IGPA                        26843.21      0.73   -4.07
 Argentina MerVal                  25404.65     -2.43  -15.50
 Colombia IGBC                     12499.63      1.49    9.93
 Venezuela IBC                         0.00         0  -100.0
 Currencies                                   daily %   YTD %
                                               change  change
 Brazil real                         3.9103     -0.88  -15.27
 Mexico peso                        19.9635     -0.24   -1.63
 Chile peso                          653.05     -0.61   -5.88
 Colombia peso                      2929.25      0.00    1.80
 Peru sol                             3.287     -0.33   -1.52
 Argentina peso (interbank)         28.2000      2.66  -34.04
 Argentina peso (parallel)             28.9      0.17  -33.46
 (Reporting by Gram Slattery, Noé Torres, Sheky Espejo
Editing by Grant McCool and Chris Reese)
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