January 21, 2020 / 7:25 PM / 2 months ago

EMERGING MARKETS-Latam assets keel as China virus sours risk appetite

    * Global markets spooked by China virus outbreak  
    * Latam stocks index set to end three-day winning streak
    * Brazil's Vale drops; ex-CEO charged with homicide

 (Adds details, updates prices)
    By Shreyashi Sanyal and Ambar Warrick
    Jan 21 (Reuters) - Stocks and currencies across Latin
America fell on Tuesday, tracking a decline in broader emerging
markets amid concerns over a flu-like coronavirus outbreak in
China.
    Broader emerging market assets dropped as news of the
contagion reminded investors of the economic fallout from the
SARS crisis in 2003 that killed nearly 800 people, and led to a
recession in Hong Kong.
    In Latin America, Brazilian stocks fell about 1.4%,
their biggest intraday loss since late-November. 
    Iron ore miner Vale was among the largest drags
on the Bovespa after documents showed that prosecutors had
charged 16 individuals with homicide over a Vale dam burst last
year, including the company's then chief executive, Fabio
Schvartsman.
    Brazil's real was slightly softer to the dollar.
    "The pace of inflows (to emerging markets) is likely to
decelerate this week amid rising concerns about China’s
coronavirus, which reportedly can be passed between humans,"
analysts at Rabobank wrote in a note.
    MSCI's index for Latin American stocks fell
1.5%, on track to snap a three-day winning streak. MSCI's index
for currencies in Latin America dropped 0.3%. 
    The risk averse mood was also backed by global growth fears
after the International Monetary Fund trimmed back its global
growth forecasts for 2020 and 2021.
    The reductions reflect the IMF's reassessment of economic
prospects for a number of major emerging markets as it marked
down growth forecasts for Chile due to social unrest and for
Mexico, due to a continued weakness in investment.
    The Mexican peso and the Chilean peso both
retreated against the dollar, while stock markets in the two
countries also fell.  
    Argentine stocks dropped more than 3%, while the
peso dipped slightly as the country's government sought
to push through legislation to help solve a mounting debt
crisis.
    Argentina faces negotiations with creditors including the
IMF to restructure about $100 billion in sovereign debt, which
President Alberto Fernandez has said the country cannot afford
to pay until it revives its stalled economy.
    Concerns over protectionist politics taking the forefront in
Argentina had sparked a crash in the peso last year, as
investors fretted over the country's ability to repay its debt
obligations.  
        
    Key Latin American stock indexes and currencies at 1911 GMT:
    
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets         1126.50            -1.6741
                                        
 MSCI LatAm                    2884.51              -1.53
                                        
 Brazil Bovespa              117229.66              -1.37
                                        
 Mexico IPC                   45666.31              -0.51
                                        
 Chile IPSA                    4693.16              -2.55
                                        
 Argentina MerVal             41711.96             -3.117
                                        
 Colombia COLCAP               1652.48              -0.23
                                        
                                                         
       Currencies             Latest     Daily % change
 Brazil real                    4.1949              -0.18
                                        
 Mexico peso                   18.7240              -0.35
                                        
 Chile peso                      773.2              -0.49
                                        
 Colombia peso                    3353              -0.69
 Peru sol                        3.317              -0.03
                                        
 Argentina peso                60.0950              -0.07
 (interbank)                            
                                        
 
 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru
Editing by Nick Zieminski and Nick Macfie)
  
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