June 14, 2019 / 2:49 PM / 4 months ago

EMERGING MARKETS-Latam stocks follow Wall Street lower, Brazil's real dips

    By Sruthi Shankar
    June 14 (Reuters) - An index of Latin American stocks fell
more than 1% on Friday, mirroring weakness on Wall Street, while
Brazil's real dropped as optimism around the proposed overhaul
of the country's pension system faded and weak economic data
weighed.
    The real fell 0.8% to 3.88 per dollar level as the
government's proposals to raise the minimum retirement age and
workers' contributions to help restore public finances are 
drawing fierce opposition and look likely to fall short of what
President Jair Bolsonaro's government was seeking.
    The currency was on track to give back all of its gains from
Thursday when a congressional report showed the overhaul would
help generate savings of 913.4 billion reais ($237 billion) over
the next decade.
    In addition, a central bank indicator showed economic
activity unexpectedly fell in April, marking the longest stretch
of declining activity since the last recession in 2016.

    "In our view, a big disappointment in the final expected
cost-savings from the pension reform could take BRL (the real)
towards the level of 5.0 against the USD," Rabobank analysts
wrote in a note.
    While analysts added the likelihood of such scenarios were
dimming, "adverse global conditions are expected to affect EM
(emerging market) assets and economies, limiting the room for a
more pronounced BRL rally."
    Broad gains for the dollar after encouraging U.S. retail
sales data also limited gains for emerging market currencies.
    Investors are squaring up for a U.S. central bank meeting
next week where policymakers might hint when they plan to cut
interest rates, the prospect of which has supported risky assets
in the recent weeks.      
    The Mexican peso was marginally higher at the end of
a week in which the currency outperformed after a deal was
struck with United States that averted tariffs on Mexican goods.
But the Chilean, the Colombian and the Argentine
 pesos all weakened.
    Stocks in the region were also hit following a weak open for
Wall Street's main indexes after U.S. chipmaker Broadcom slashed
sales forecasts because of the escalating U.S.-China trade war
and weak industrial output data out of China.
    The MSCI index of Latin American stocks
dropped about 1%.
    Sao Paulo-traded stocks were down 0.4% as major
banks fell on expectations of higher taxes, while Mexico's main
stock index slid 0.3%. 
    
    Key Latin American stock indexes and currencies at 1925 GMT 
    
 Stock indexes                       daily %
                            Latest    change
 MSCI Emerging Markets      1015.55    -0.64
                                     
 MSCI LatAm                 2759.98    -1.11
                                     
 Brazil Bovespa            98401.29    -0.38
                                     
 Mexico IPC                43350.72     -0.3
                                     
 Chile IPSA                 5061.56     -0.2
                                     
 Argentina MerVal                 -        -
                                     
 Colombia IGBC             12276.52    -0.08
                                     
                                            
 Currencies                          daily %
                                      change
                             Latest  
 Brazil real                 3.8841    -0.78
                                     
 Mexico peso                19.1545     0.17
                                     
 Chile peso                   697.8    -0.26
                                     
 Colombia peso              3268.94    -0.07
                                     
 Peru sol                         -        -
                                     
 Argentina peso             43.6500    -0.64
 (interbank)                         
                                     
 

 (Reporting by Sruthi Shankar in Bengaluru)
  
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