October 26, 2018 / 2:58 PM / 9 months ago

EMERGING MARKETS-Brazil markets rise but Latam to end weekly winning streak

    By Susan Mathew
    Oct 26 (Reuters) - Brazil's real and stocks rose on Friday
ahead of its weekend presidential election, tempering losses in
Latin American equities after Wall Street resumed its sell-off.
    MSCI's index of emerging market stocks
dropped 0.3 percent, while currencies were flat.
Although the region's markets fared better than emerging markets
elsewhere, they were on track to end a five-week winning streak.
    Other Latam currencies weakened as the dollar was bolstered
by data showing U.S. economic growth slowed less than expected
in the third quarter. But that could not outweigh concerns of a
slowdown in corporate profits after grim earnings reports from
U.S. tech giants Amazon and Alphabet.
    The Brazilian real firmed 0.6 percent ahead of the
final round of presidential elections on Sunday, in which
market-preferred presidential candidate Jair Bolsonaro is
expected to defeat leftist rival Fernando Haddad.
    The real is set to log weekly gains for a sixth straight
session – its longest weekly winning streak since early last
year – in a rally underpinned by hopes of much-needed economic
reforms promised by the Bolsonaro campaign.
    "Bolsonaro's victory is largely priced in, so the real's
gains on Monday are likely to be limited. Focus will now
probably rest on Bolsonaro's appointments and the political
course he is going to take, mainly as regards reforms," analysts
at Commerzbank said in a note.
    "We see the risk that the relief following the run-off will
soon be followed by disillusionment. It would seem that the
financial markets are very optimistic regarding the new
government's willingness to implement reforms."
    The Brazilian stock index climbed 0.4 percent,
driven by gains in Petrobras on expectations its
corruption-tainted management would be overhauled by the
Bolsonaro government.
    Mexican markets were pressured by uncertainty regarding the
fate of an under-construction airport in Mexico city and U.S.
President Donald Trump's threats of closing the border to stop a
migrant caravan.
    The result of a public poll by incoming president Andres
Manuel Lopez Obrador on whether the airport should be completed
is expected next week. Analysts worry international treaties
would be violated and companies would lose contracts if the
project were scrapped, despite Obrador's assurances that "no
injustice will be committed."
    "We think a cancellation is unlikely, but the process would
legitimize the referendum as a way to make decisions," Jonas
David, an FX strategist at UBS Global Wealth Management, said in
a note.
    The Colombian peso was weaker ahead of a central bank
meeting later in the day, when it will likely hold the benchmark
interest rate steady on a slight improvement in the economy and
easing inflation, a Reuters poll showed.
    Key Latin American stock indexes and currencies at 1417 GMT:
 Stock indexes                           Daily %     YTD %
                                          change    change
 MSCI Emerging Markets          936.59      -1.3    -18.08
 MSCI LatAm                    2656.91     -0.31     -5.76
 Brazil Bovespa               84078.24     -0.01     10.05
 Mexico IPC                   45832.18     -0.96     -7.14
 Chile IPSA                    5134.63     -0.14     -0.14
 Argentina MerVal             29072.62     -0.89     -3.30
 Colombia IGBC                12369.98     -0.42      8.79
 Currencies                              Daily %     YTD %
                                          change    change
 Brazil real                    3.6808      0.59     -9.98
 Mexico peso                   19.4960     -0.04      1.04
 Chile peso                        689     -0.20    -10.79
 Colombia peso                 3181.07     -0.41     -6.26
 Peru sol                        3.345     -0.03     -3.23
 Argentina peso (interbank)    36.6300      0.44    -49.22
 Argentina peso (parallel)        36.5      1.37    -47.32

 (Reporting by Susan Mathew in Bengaluru; Editing by Dan
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