January 30, 2020 / 7:39 PM / 25 days ago

EMERGING MARKETS-Latam assets plummet as coronavirus fears erode risk appetite

    * Virus fears spur continued selling of risk assets
    * Mexican peso drops as economy shrinks in 2019
    * Growth conditions in Brazil and Mexico look dim -analyst

 (Adds details, updates prices)
    By Shreyashi Sanyal and Ambar Warrick
    Jan 30 (Reuters) - Stocks and currencies in Latin America
fell on Thursday, as a rising death toll and increased cases of
the Chinese coronavirus brewed widespread fears over its
economic impact. 
    A bout of panic selling took over global financial markets
as the death toll from the Wuhan coronavirus rose to 170, with
more than 8,100 patients infected.
    Latin American assets have been hit particularly hard by the
perceived demand disruptions in China, which is one of the
region's largest export destinations. 
    "Given expectations of further escalation in the numbers of
infections and deaths related to the coronavirus, anxiety,
nervousness and market pessimism internationally should increase
globally in the short term," Chetan Sehgal, lead portfolio
manager at Templeton Emerging Markets Investment Trust, wrote in
a note. 
    The Mexican peso marked its worst drop to the dollar
in more than two months, after data showed that Latin America's
No. 2 economy contracted for the first time in a decade last
year. 
    Nagging uncertainty over the economic management of Mexican
President Andres Manuel Lopez Obrador has resulted in laggard
business activity, a weakness that is expected to persist in
2020.
    Mexican stocks dropped about 0.7%.
    "Growth conditions in Brazil and Mexico continue to look dim
as economic momentum can at best to be said to be treading
water," TD Securities wrote in a note.
    Brazil's real touched its weakest level against the
dollar in two months. Stocks sank to a more-than one
month low.
    Brazilian Economy Minister Paulo Guedes said the government
will submit its administrative reform proposals to Congress "in
a week or two" and said the government would do all that it
could to pass tax reforms this year.
    The intended reforms are part of several promised by 
President Jair Bolsonaro to free up government spending and
improve infrastructure. 
    Chile's peso weakened 0.7% against the dollar,
hitting levels not seen since early December. 
    Chile's central bank held its benchmark interest rate on
Wednesday, as it seeks to steady a wavering economy following
months of intense and often violent protests.
    MSCI's index for Latin American currencies
fell 1%, while its index for stocks declined
more than 2%. 
    The Argentine peso and stocks were flat. The
country will make an offer to creditors for the restructuring of
its debt in the second week of March, with a looming
presidential deadline for dealing with public debt.
   
  
    Latin American stock indexes and currencies at 1910 GMT:
    
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets         1068.61               -2.63
                                        
 MSCI LatAm                    2768.63               -2.22
                                        
 Brazil Bovespa              113350.48               -1.76
                                        
 Mexico IPC                   44832.23               -0.67
                                        
 Chile IPSA                    4550.75               -0.51
                                        
 Argentina MerVal             40348.40               0.017
                                        
 Colombia COLCAP               1630.47                -0.2
                                        
                                                          
       Currencies             Latest      Daily % change
 Brazil real                    4.2622               -1.03
                                        
 Mexico peso                   18.8445               -0.81
                                        
 Chile peso                     797.35               -0.73
                                        
 Colombia peso                  3408.5               -0.69
 Peru sol                        3.365               -0.62
                                        
 Argentina peso                60.2500               -0.01
 (interbank)                            
                                        
 
    

 (Reporting by Shreyashi Sanyal in Bengaluru; editing by
Jonathan Oatis and Grant McCool)
  
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