September 25, 2019 / 3:11 PM / 19 days ago

EMERGING MARKETS-Trade angst, Washington's political uncertainty slam Latam assets

    By Agamoni Ghosh
    Sept 25 (Reuters) - Latin American assets slumped on
Wednesday as political uncertainty in Washington in wake of an
impeachment inquiry into U.S. President Donald Trump and fresh
U.S.-China trade tensions jilted investor sentiment. 
     MSCI's index of Latin American stocks and
currencies slipped between 0.6% and 1%. 
    Trump delivered a stinging rebuke over China's trade
practices on Tuesday to which a top Chinese diplomat hit back
saying Beijing had no intention of "playing 'Game of Thrones' on
the world stage."
    The bitter exchange comes just a week before high-level
talks are scheduled between the world's two largest economies.
    "It's a classic risk-off mood today with Latam moves in line
with other emerging markets," said Christian Lawrence, senior
market strategist, Latam FX at Rabobank.
    To make things worse, a move to launch an impeachment
inquiry into Trump further escalated after the White House
released a call summary between the U.S. president and his
Ukrainian counterpart Volodymyr Zelenskiy.
    The summary shows Trump asking Zelenskiy in a July telephone
call to investigate whether former Vice President Joe Biden shut
down an investigation into a company that employed his son.
     Mexican stocks fell 1%, while the peso shed
0.7% against the dollar, a day ahead of its monetary policy
meeting where expectations are rife for a 25 basis point cut in
interest rates for a second time this year. 
    "The central bank will keep cutting rates given this seems
like an easing cycle," said Lawrence, "but I don't think
inflation is at that level yet where they will opt for a 50
basis point cut."  
    Brazil's real fell for a third-straight session. Data
showed loan defaults in Latin America's largest economy rose to
4.0% in August, up from 3.9% the month before and the highest
level since January.    
    The Bovespa snapped a four-day gaining streak to
fall 0.6% with homebuilder Eztec dropping nearly 5%
after the company said it had approved a restricted share offer
that will raise almost 1 billion reais ($240 million). 
    Chile's peso fell to their lowest level since January
2016 as prices of copper, the country's top export,
slipped.

  Latin American stock indexes and currencies at 14:52 GMT
 Stock indexes                                   daily %
                           Latest                 change
 MSCI Emerging Markets            1001.32          -0.99
                                           
 MSCI LatAm                       2631.27          -1.08
                                           
 Brazil Bovespa                 103196.99          -0.65
                                           
 Mexico IPC                      42727.79          -0.86
                                           
 Chile IPSA                       4958.20          -0.85
                                           
 Argentina MerVal                27581.25         -0.857
                                           
 Colombia IGBC                   12848.05          -0.79
                                           
                                                        
 Currencies                                      daily %
                                   Latest         change
 Brazil real                       4.1884          -0.46
                                           
 Mexico peso                      19.5868          -0.75
                                           
 Chile peso                         727.1          -0.56
                                           
 Colombia peso                    3451.78          -0.52
 Peru sol                          3.3518          -0.32
                                           
 Argentina peso                   57.0000          -0.18
 (interbank)                               
                                           
 

 (Reporting by Agamoni Ghosh in Bengaluru; Editing by Lisa
Shumaker)
  
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