August 10, 2018 / 3:28 PM / 7 days ago

EMERGING MARKETS-Turkey panic causes shakeout in LatAm currencies, equities

    SAO PAULO, Aug 10 (Reuters) - Latin American equities and
currencies slumped across the board on Friday, amid a broader
emerging markets shakeout after Turkey's lira went into free
fall.
    The lira currency had been falling for some time
amid worries about Turkish President Tayyip Erdogan's influence
over monetary policy and worsening relations with the United
States.
    That turned into a rout on Friday, with the lira diving more
than 18 percent on the day to a record low after U.S. President
Donald Trump took steps to punish Turkey in a wide-ranging
dispute.
    Trump said he had authorized significant tariffs on Turkish
aluminum and steel, while Erdogan implored Turks to exchange
gold and U.S. dollars into lira, causing traders to pile into
the relatively safe dollar.
    "These factors had been viewed as isolated and local, but
they started triggering a wider contagion this morning," a Rio
de Janeiro-based fund manager said.
    Currencies in Brazil , Mexico, Chile
, Colombia, and Argentina had all fallen at least
1 percent at one point in morning trade.
    The volatile Argentine peso was the biggest
loser, falling some 3.1 percent against the dollar. Traders said
an expanding corruption probe involving the highest levels of
business and government, large even by Argentine standards, was
adding to the Turkey woes. 
    Equities markets in Brazil, Mexico, and Argentina
 were also off over 1 percent.
    Brazil's benchmark Bovespa index fell some 2.1
percent after several companies reported weak second quarter
earnings on Thursday night. 
    Among the companies down at least 3 percent in morning trade
after missing estimates were water and sewage company Cia de
Saneamento Basico do Estado de Sao Paulo SA, known as
Sabesp, discount retailer Lojas Americanas SA,
cosmetics retailer Natura Cosmeticos SA and
e-commerce company B2W Cia Digital SA.

    Food processor BRF SA was also down 5.7 percent
after disappointing results on Friday. 
    Heavily weighted Itau Unibanco Holding SA,
Brazil's largest private lender, fell 3.1 percent after the
nation's central bank barred the company from acquiring control
of financial services firm XP Investimentos SA.
    
Key Latin American stock indexes and currencies at 1434 GMT:
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1061.21     -1.62     -6.89
                                                  
 MSCI LatAm                    2574.69     -2.92     -6.22
                                                  
 Brazil Bovespa               77112.76      -2.1      0.93
                                                  
 Mexico IPC                   48658.60     -1.19     -1.41
                                                  
 Argentina MerVal             26092.32     -3.03    -13.22
                                                  
 Colombia IGBC                12034.22     -0.38      5.84
                                                  
 Venezuela IBC               108928.02      2.37   8523.59
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.8517     -1.29    -13.98
                                                  
 Mexico peso                   18.9200     -1.14      4.12
                                                  
 Chile peso                      652.8     -0.95     -5.84
                                                  
 Colombia peso                 2936.55     -0.90      1.55
 Peru sol                        3.275     -0.15     -1.16
                                                  
 Argentina peso                29.0200     -3.10    -35.91
 (interbank)                                      
                                                  
 Argentina peso                  28.55     -2.10    -32.64
 (parallel)                                       
                                                  
 

 (Reporting by Gram Slattery and Patricia Duarte; Additional
reporting by Behiye Selin Taner in Istanbul and Jorge Otaola in
Buenos Aires; editing by Jonathan Oatis)
  
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