August 9, 2017 / 8:13 PM / a year ago

EMERGING MARKETS-LatAm stocks, currencies down as North Korea tensions mount

 (Updates prices)
    By Bruno Federowski
    SAO PAULO, Aug 9 (Reuters) - Latin American stocks and
currencies fell on Wednesday, with the Brazilian real and the
Mexican peso leading the losses, as investors fled for
safe-haven assets amid brewing geopolitical tensions between the
United States and North Korea.
    North Korea said it is "carefully examining" plans for a
missile strike on the U.S. Pacific territory of Guam just hours
after U.S. President Donald Trump said that any threat to the
United States would be met with "fire and fury."
    Trump followed up his warning with a boast on Wednesday
about the strength of the American nuclear arsenal, although he
expressed hope it would not need to be used.
    Emerging markets suffered as investors fled to the safety of
U.S. bonds, with a widely followed measure of U.S. stock market
anxiety jumping to a one-month high.
    The Mexican peso, which is typically used as a
hedging instrument for other less liquid regional currencies,
suffered among the biggest losses in Latin American foreign
exchange markets.
    The move came ahead of a pivotal week for the Mexican
currency as policymakers are set to begin negotiations on the
North American Free Trade Agreement between the United States,
Mexico and Canada.
    Hopes that the countries could quickly reach a beneficial
agreement have lifted the Mexican peso this year, making it one
of the world's best-performing currencies. Still, some traders
say that the peso's standing may be fragile.
    "There is risk of a selloff if NAFTA negotiations don't
progress well, although most observers don't expect such an
outcome," strategists at 4Cast wrote in a report.
    The Brazilian real slipped nearly 0.7 percent.
    Hopes that President Michel Temer will manage to pass a
proposed overhaul of Brazil's pension system have kept the
currency near its strongest levels in three months, but
political concerns have limited further gains. The exchange rate
has hovered around 3.15 reais to the dollar since mid-July.
    Current levels are "are pretty fair so the strategy is more
a 'selective buying' instead of a big directional trade,"
Santander director Sandro Sobral wrote in a note to clients.
    Brazil's benchmark Bovespa stock index fell 0.5
percent as risk aversion triggered profit-taking on shares of
meatpacker JBS SA after a seven-day stretch of gains.
    Shares of rental car company Movida Participações SA
, which are not part of the benchmark index, fell the
most in 11 weeks after costs and expenses hurt second-quarter
operating profit.
    Key Latin American stock indexes and currencies at 1943 GMT:
 Stock indexes                        daily %    YTD %
                             Latest    change   change
 MSCI Emerging Markets       1067.70       -1    25.08
 MSCI LatAm                  2774.93    -0.67    19.35
 Brazil Bovespa             67538.77    -0.53    12.14
 Mexico IPC                 51172.76     -0.3    12.12
 Chile IPSA                  5081.37    -0.84    22.40
 Chile IGPA                 25342.66    -0.79    22.23
 Argentina MerVal           20927.83    -1.54    23.70
 Colombia IGBC              10820.88    -0.35     6.84
 Venezuela IBC             184187.97    -6.39   480.94
 Currencies                           daily %    YTD %
                                       change   change
 Brazil real                  3.1499    -0.67     3.15
 Mexico peso                 17.9590    -0.58    15.51
 Chile peso                      648     0.03     3.50
 Colombia peso                  3001    -0.15     0.02
 Peru sol                      3.248    -0.18     5.11
 Argentina peso              17.6950     0.16   -10.29
 Argentina peso                18.36     0.22    -8.39
 (Reporting by Bruno Federowski; Editing by James Dalgleish and
Phil Berlowitz)
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