August 17, 2018 / 3:11 PM / a month ago

EMERGING MARKETS-Brazilian equities drop amid political woes, lira rout

    SAO PAULO, Aug 17 (Reuters) - Brazilian equities slid on
Friday after a major opinion poll painted a grim picture for the
market's favorite presidential candidates, while concerns
regarding Turkey's lira currency lingered.
    A poll released on Friday by Sao Paulo's XP Investimentos
showed right-wing populist congressman Jair Bolsonaro leading
the field for October's presidential election, assuming that
former leftist President Luiz Inacio Lula da Silva is barred
from running due to corruption charges, which is considered
likely.
    The poll also showed leftist former Sao Paulo Mayor Fernando
Haddad gaining ground, while market-friendly centrist Geraldo
Alckmin struggled to gain traction despite backing from an array
of powerful political parties.
    At the same time, traders were spooked by instability in
Turkey's lira currency, which has lost nearly 40
percent of its value against the dollar this year. The lira lost
5 percent on Friday alone after a Turkish court rejected a U.S.
Christian pastor's appeal for release, a day after the United
States warned of further sanctions unless Ankara hands over the
detained minister.
    "It was a double blow," said Marco Tulli, manager on the
Bovespa desk of Sao Paulo brokerage Coinvalores. 
    The Bovespa fell 1.41 percent in late morning trade.
The region's other big loser in equities markets was Argentina's
volatile Merval index, which fell 1.81 percent.
    The biggest loser on the Bovespa was food processor Marfrig
Global Foods SA, whose shares fell 6 percent - after
rising over 8 percent at opening - as traders reacted negatively
to a deal for Tyson Foods Inc to buy Marfrig's U.S.
chicken processor, Keystone Foods.
    Analysts at Itau BBA reiterated their underperform rating on
Marfrig, saying the unit's $2.5 billion price tag was too low.
    Preferred and common shares in state utility Centrais
Eletricas Brasileiras SA, known as Eletrobras, fell
3.7 percent and 3.9 percent, respectively, after the government
postponed a key privatization auction until late September, days
before the first round of the presidential election.

    Most currencies were down moderately, as the drop in the
lira caused a flight out of emerging markets. Brazil's real
 posted the biggest drop, falling 0.92 percent against the
dollar in late morning trade.
    
Key Latin American stock indexes and currencies at 1436 GMT:
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1021.61         0    -11.82
                                                  
 MSCI LatAm                    2488.35     -1.89    -10.32
                                                  
 Brazil Bovespa               75732.13     -1.41     -0.88
                                                  
 Mexico IPC                   48014.98     -0.09     -2.71
                                                  
 Argentina MerVal             26451.94     -1.81    -12.02
                                                  
 Colombia IGBC                12063.99      0.13      6.10
                                                  
 Venezuela IBC               219356.30     36.52  17265.95
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.9412     -0.92    -15.93
                                                  
 Mexico peso                   19.0865     -0.50      3.21
                                                  
 Chile peso                      667.8      0.15     -7.96
                                                  
 Colombia peso                 3023.18     -0.13     -1.36
 Peru sol                        3.322     -0.27     -2.56
                                                  
 Argentina peso                29.7100      0.30    -37.39
 (interbank)                                      
                                                  
 Argentina peso                   29.5      0.51    -34.81
 (parallel)                                       
                                                  
 

 (Reporting by Paula Arend Laier and Gram Slattery; editing by
Jonathan Oatis)
  
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