September 4, 2018 / 4:16 PM / 19 days ago

EMERGING MARKETS-Brazil real erases losses after prosecutors charge leftist VP candidate

    By Bruno Federowski
    BRASILIA, Sept 4 (Reuters) - The Brazilian real erased early
losses on Tuesday after state prosecutors charged Workers Party
vice presidential candidate Fernando Haddad with corruption,
driving investors to pare bets on his electoral strength.
    Haddad is likely to replace incarcerated former President
Luiz Inácio Lula da Silva in the ballot after an electoral court
blocked him from running after being convicted for graft.

    Haddad's candidacy is not in danger of being blocked, as it
would be virtually impossible for a trial to play out before the
country's elections next month.
    Lula, who has nevertheless led voter intention polls, has
railed against austerity and investors believe he would be
unlikely to pursue spending cuts or privatizations necessary to
bring back Brazil's investment grade sovereign rating even if he
were somehow elected.
    The Brazilian real turned flat after the charge,
moving away from an emerging-market rout that drove currencies
from Chile, Mexico, Colombia and Argentina as much as 2.2
percent lower.
    The sell-off also ravaged local debt markets, driving an
exchange-traded fund modeled on JPMorgan's local emerging-market
debt index to a record low.
    Trade tensions have rattled global and emerging markets,
with fears rising again after U.S. President Donald Trump's
announcement over the weekend that there was no need to keep
Canada in the North American Free Trade Agreement. 
    This followed a report that Trump was prepared to ramp up a
trade war with China and could be ready to impose more tariffs
on Chinese imports as soon as Thursday.
    
    Key Latin American stock indexes and currencies at 1530 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
                                  Latest               
 MSCI Emerging Markets              1047.13     -0.84    -9.61
 MSCI LatAm                         2444.30     -0.79   -13.57
 Brazil Bovespa                    75210.77     -1.29    -1.56
 Mexico IPC                        49360.15     -0.26     0.01
 Chile IPSA                         5218.96     -0.33    -0.33
 Argentina MerVal                  27700.30     -3.84    -7.87
 Colombia IGBC                     12246.98      0.21     7.71
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                     Latest            
 Brazil real                         4.1506     -0.03   -20.17
 Mexico peso                        19.3760     -0.96     1.67
                                                       
 Chile peso                           694.4     -1.67   -11.48
 Colombia peso                      3082.45     -1.11    -3.26
 Peru sol                             3.314     -0.39    -2.32
 Argentina peso (interbank)         39.0500     -2.18   -52.37
                                                       
 Argentina peso (parallel)             38.5     -1.30   -50.05
                                                       
 
 (Reporting by Bruno Federowski; Editing by Dan Grebler)
  
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