November 9, 2018 / 9:58 PM / a year ago

EMERGING MARKETS-LatAm stocks post worst week in three months, currencies dip

 (Recasts; updates stock and currency prices, adds quote)
    Nov 9 (Reuters) - Latin American stocks recorded their worst
weekly performance in three months on Friday, with muted
sentiment toward Mexico persisting a day after a senator's
proposal to cap and eliminate certain banking commissions.
    The proposal has tarnished investor sentiment toward Mexican
President-elect Andres Manuel Lopez Obrador's government, which
has yet to take office, despite his signaling on Friday he would
not support the bill.
    The proposal comes less than two weeks after an already
started airport megaproject was scrapped following a public
    The MSCI index of Latin America stocks fell
0.7 percent on the day, which combined heavy losses in the
previous three sessions consigned it to a 3.7 percent drop for
the week.
    While Mexico's benchmark stock index was little
changed after retracing heavy intraday losses following Lopez
Obrador's statement on the banking bill, sentiment toward
banking shares remaining cautious. 
    Grupo Financiero Banorte SAB de CV lost 1.8
percent on the day.
    "The (senator's) bill adds to the perception of market
unfriendliness of the new administration, coming shortly after
the airport cancellation," wrote Dirk Willer, managing director
and head of emerging market strategy at Citigroup, in a client
note. "We have a bearish bias over the medium term, as (Lopez
Obrador) has promised to hold more referendums, possibly over
energy reform."
    Mexico's peso firmed about 0.5 percent, making up a
fraction of its 1.6 percent slide on Thursday. The country's
central bank has its next meeting scheduled in less than a
week's time.
    Juan Carlos Alderete, a senior economist for Mexico with
Banorte said he expects the central bank to raise rates by 25
basis points to 8 percent, citing factors including higher
upside risks to inflation and the high volatility involved in
the peso's recent weakness. 
    Regional foreign exchange markets fared only slightly
better, but a firming in Brazil's real on incoming
President Jair Bolsonaro's comments on pension reform held the
MSCI index of Latin America currencies from
declining more than 0.6 percent.
    The right-wing politician said he would like to see some
form of pension reform, much watched for among investors, passed
this year to make it easier to deal with the fiscal deficit
after he takes office on Jan. 1, 2019.
    The Bovespa index was flat as gains among financial
stocks were largely negated by losses in materials with iron ore
miner Vale falling 4.2 percent.
    In Argentina, the peso firmed about 0.2 percent, with
traders ascribing the modest move to the central bank adjusting
minimum cash balances to curb speculation in the currency.

    However, local stocks fell about 2.7 percent on
broad-based losses, as the overhang of a decline on Wall Street
sent the benchmark to its lowest in more than a week and a half.
    Chile's stocks benchmark fell 0.9 percent, as
all but four stocks on the benchmark declined.
    Key Latin American stock indexes and currencies at 1625 GMT 
 Stock indexes               Latest      Daily    YTD pct
                                          pct      change
 MSCI Emerging Markets          976.17     -1.75    -15.73
 MSCI LatAm                   2,624.13     -0.71     -7.21
 Brazil Bovespa              85,641.21      0.02     12.09
 Mexico IPC                  44,177.28     -0.03    -10.49
 Chile IPSA                   5,180.35      -0.9     -0.90
 Argentina MerVal            29,912.49     -2.68     -0.51
 Colombia IGBC               12,355.36     -0.62      8.66
 Currencies                  Latest      Daily    YTD pct
                                          pct      change
 Brazil real                    3.7339      0.04    -11.26
 Mexico peso                   20.0945      0.50     -1.97
 Chile peso                      684.5     -1.05    -10.20
 Colombia peso                 3,178.5     -0.86     -6.18
 Peru sol                         3.37     -0.18     -3.95
 Argentina peso                35.3800      0.34    -47.43
 (Reporting by Aaron Saldanha in Bengaluru, editing by G Crosse)
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