October 23, 2017 / 8:14 PM / a year ago

EMERGING MARKETS-Argentina markets jump on election boost

 (Updates prices)
    By Bruno Federowski
    SAO PAULO, Oct 23 (Reuters) - Argentina's stocks, bonds and currency jumped
on Monday as investors bet a strong electoral performance from President
Mauricio Macri's coalition could boost his reform agenda, while other markets in
the region slumped.
    While "Let's Change" will remain a minority in the lower house of Congress
and the Senate, as expected, its defeat of populist former President Cristina
Fernandez in the Senate race in populous Buenos Aires province and strong
performance nationwide should help in negotiations with opposition lawmakers,
analysts said.
    Investors expect that momentum will help it pass its 2018 budget, which aims
to cut the fiscal deficit by one percentage point to 3.2 percent of gross
domestic product, along with tax, labor and capital markets reforms.

    "A very solid electoral performance by President Macri, which should endow
the administration with a stronger mandate to purse his reformist agenda,"
Goldman Sachs economist Alberto Ramos wrote in a report.
    Argentina's benchmark Merval index rose 3.26 percent to new all-time
    Outside of Argentina, however, markets were more tumultuous. Brazilian
markets slipped nearly 1 percent as investors avoided risky bets ahead of a
widely-expected vote in the lower house of Congress on whether to put President
Michel Temer on trial before the Supreme Court for corruption charges.
    Traders see Temer dodging the charges but the vote may corrode his political
capital, potentially delaying the implementation of a plan to streamline the
pensions system seen as key to boosting long-term growth.
    Mexico's IPC stock exchange slipped 0.78 percent and the peso dipped 0.48
percent amid uncertainty about who will be named the next chair of the U.S.
Federal Reserve.
    The speculation about the future of U.S. monetary policy, as well as the
advance of tax reform, will likely lead to further gains for the dollar, Banco
Base said in a report. 
    Key Latin American stock indexes and currencies at 1924 GMT:
 Stock indexes                                 daily %      YTD %
                                Latest          change     change
 MSCI Emerging Markets              1115.14      -0.41      29.85
 MSCI LatAm                         2882.91      -1.57      25.13
 Brazil Bovespa                    75634.51      -0.99      25.58
 Mexico IPC                        49600.00      -0.78       8.67
 Chile IPSA                         5560.06       0.65      33.93
 Chile IGPA                        27849.29       0.64      34.32
 Argentina MerVal                  27859.01       3.26      64.67
 Colombia IGBC                     10899.73      -0.04       7.62
 Venezuela IBC                       612.76        4.1     -98.07
 Currencies                                    daily %      YTD %
                                                change     change
 Brazil real                         3.2320      -0.05       0.53
 Mexico peso                        19.0795      -0.48       8.72
 Chile peso                          632.56      -0.58       6.03
 Colombia peso                         2952      -0.68       1.68
 Peru sol                             3.239      -0.03       5.40
 Argentina peso (interbank)         17.4100       0.17      -8.82
 Argentina peso (parallel)            18.02      -0.06      -6.66
 (Reporting by Bruno Federowski; Editing by Nick Zieminski and Susan Thomas)
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