March 22, 2019 / 3:00 PM / 5 months ago

EMERGING MARKETS-Latam stocks, currencies fall on global growth concerns

    * Weak economic data from Europe and U.S. hit EM assets 
    * Brazil assets continue to slide on Temer arrest 
    * Pemex may get new capital injection from public fund 

    By Agamoni Ghosh
    March 22 (Reuters) - Latin American stocks and currencies
fell on Friday as investors piled on to safe-heaven assets after
weak data from Europe and the United States compounded worries
about global growth. 
    German manufacturing contracted further in March and
economic activity slowed in France and the euro zone overall,
surveys showed on Friday.  
    MSCI's index of Latin American currencies
fell 1.5 percent as the greenback recovered sharply against the
euro after the data. 
    "Today's downside surprise in European PMIs was not part of
the plan and has put EUR under renewed pressure, strengthening
USD and weakening EM currencies," Morgan Stanley analysts said
in a note.
    U.S. manufacturing data was lower than expected,  causing
the U.S. Treasury curve to invert. An inverted yield curve is
widely understood to be a leading indicator of recession.

    Brazil's real and stocks on the Bovespa led
losses across assets in the region, sliding over 2 percent each
with additional pressure continuing from the previous session
after the arrest of former President Michel Temer.
     Investors perceive that the arrest of Temer on graft
charges will shift political focus to the former president and
slow proposed pension reform seen as critical to injecting life
into a tepid economic recovery.
    Temer, who left office on Jan. 1, is accused of leading a
"criminal organization" that took in 1.8 billion reais ($472
million) in a bribery and kickback scheme related to the
construction of a nuclear power complex.  
    "We anticipate volatility, with a tough negotiation process
ahead for pension reform, and a series of risks that can
increase tension, " analysts from XP Investments wrote in note.
    Mexican stocks fell about a percent while the peso
 slipped to a seven-week low as crude prices extended
losses and as investors continued to be worried about the effect
of debt-laden oil-firm Pemex on the economy. 
    Mexico's deputy finance minister said on Thursday the
government was considering using part of a $15.4 billion public
income stabilization fund to pay some debt obligations for
heavily leveraged state-oil company Pemex          .
    Investors see the frequent capital injections into Pemex
from other parts of the government's coffers as a temporary fix,
which they believe is not going to solve the problem for the
state-oil company's dismal financial condition.  
    Chile's peso fell 1.6 percent tracking a decline in
the price of copper, the country's top export, while
stocks on the IPSA index hovered around its lowest
levels since the beginning of January. 
    Colombia's peso moved further away from five-month
highs, while local stocks fell for the first time in ten
    Key Latin American stock indexes and currencies at 1430 GMT
 Stock indexes                        daily %
                             Latest    change
 MSCI Emerging Markets       1061.09     -0.8
 MSCI LatAm                  2747.70    -3.08
 Brazil Bovespa             94745.13    -2.05
 Mexico IPC                 42923.68    -0.76
 Chile IPSA                  5225.79    -0.68
 Argentina MerVal           33587.12    -1.75
 Colombia IGBC              13275.51    -0.71
 Currencies                           daily %
 Brazil real                  3.8845    -2.23
 Mexico peso                 19.0510    -0.99
 Chile peso                    677.3    -1.17
 Colombia peso               3122.85    -1.16
 Peru sol                      3.295    -0.24
 Argentina peso              42.1400    -2.16

 (Reporting by Agamoni Ghosh; Additional reporting by Camila
Editing by Susan Thomas)
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