May 20, 2020 / 7:27 PM / 14 days ago

EMERGING MARKETS-Rise in commodity prices lift Latam assets as recovery hopes grow

    * Mexican peso hits highest since mid-April 
    * Colombian peso at 10-week high, Chilean peso hits 11-week
    * Stocks rally on hopes of strong first half in 2021 
    * Negotiators with creditors may extend beyond May 22 -

 (Adds comments, updates prices)
    By Shreyashi Sanyal and Susan Mathew
    May 20 (Reuters) - Latin American stocks and currencies were
lifted by a rise in commodity prices on Wednesday, with the
Mexican peso hitting a five-week high, as markets looked to a
strong post-pandemic recovery.
    In line with a Wall Street rally, most regional bourses
traded between 0.5% and 1% higher.
    "The stock market is seeing the first and second quarters of
2021 as having very good results. Meaning the bounce back," said
Robert Lutts, president and chief investment officer at Cabot
Wealth Management Inc.
    "We're going to be past a lot of the troubles with COVID-19
by then and economies are going to be much more open, and we're
going to a see a hidden benefit from this whole crisis:
Companies are going to be much more efficient." 
    Brazilian airline Azul shot up 13% on plans to
increase daily flights by 46% in June compared with May. Other
major gainers were oil giant Petrobras and iron ore
miner Vale.   
    Latin American currencies firmed against a weaker dollar
despite a surging number of new COVID-19 cases in the region's
largest economy, Brazil, where the political picture became
cloudier after yet another resignation from President Jair
Bolsonaro's government.
    Culture Secretary Regina Duarte resigned after roughly two
months in the post, citing personal reasons. This followed
resignations by the justice minister, as well as the newly
appointed health minister following his predecessor's ouster in
    "The continued rapid spread of the coronavirus through
Brazil means that the economy will pull out of its slump more
slowly than in many other emerging markets," said William
Jackson, chief emerging markets economist at Capital Economics. 
    "And with the crisis challenging the government's stability,
the risks are skewed towards further falls in the real over the
next few months."
    But against a weaker dollar on Wednesday, Brazil's real
 climbed 1%. As oil prices surged, Mexico's peso
jumped 2.2%, while Colombia's currency hit a 10-week
high. Higher copper prices propelled Chile's peso to its
highest in 11 weeks.
    But given the bleak near-term future, demand for real assets
like gold could keep currencies on the back foot, Cabot Wealth
Management's Lutts said.
    Recent economic data from the region has been dismal as
lockdowns hit economic activity. Analysts increasingly revise
expectations lower.     
    In Argentina, there is a "big chance" for negotiations with
creditors to extend beyond a May 22 deadline, Finance Minister
Martin Guzman said, assuring "constructive" dialogue between
    Key Latin American stock indexes and currencies at 1911 GMT:
     Stock indexes              Latest        Daily %
 MSCI Emerging Markets             931.17           0.64
 MSCI LatAm                       1637.86           1.84
 Brazil Bovespa                  81659.61           1.14
 Mexico IPC                      36081.97           0.61
 Chile IPSA                       3739.58           0.26
 Argentina MerVal                39406.14          0.044
 Colombia COLCAP                  1070.09           0.23
        Currencies              Latest        Daily %
 Brazil real                       5.6833           1.34
 Mexico peso                      23.0669           2.66
 Chile peso                         802.7           1.88
 Colombia peso                    3805.31           0.70
 Peru sol                          3.4007           0.74
 Argentina peso (interbank)       67.9900          -0.12
 (Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru;
editing by Jonathan Oatis and Richard Chang)
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