November 15, 2019 / 7:15 PM / 8 months ago

EMERGING MARKETS-Chilean assets zoom on constitution deal; Latam FX to snap 9 day losing streak

    * Chilean peso on way to best day in more than a decade
    * Latin American FX set to snap out of 9 days of losses
    * Brazil markets shut for holiday 

 (Updates prices)
    By Susan Mathew
    Nov 15 (Reuters) - A surge in Chilean assets lifted Latin
American markets on Friday after lawmakers agreed to hold a
referendum to replace a dictatorship-era constitution, while
optimism on the U.S.-China trade front also lifted the mood.  
    Chile's stock index soared nearly 8%, on track to
post its biggest one-day gain in 11 years. The peso
jumped 4%, putting the broader Latin American index
 in positive territory for the first time in 10 
    The currency has lost 11.4% since Oct. 21, when protesters
turned to vandalism after a hike in public transport fares
sparked a wider unrest over economic inequality in one of Latin
America's most stable nations. 
    Bowing to one of the demands, lawmakers signed an agreement
to hold a referendum next April in which voters will be asked
whether they approve the idea of a new constitution and whether
current lawmakers should serve on the commission that would
redraft the document.
    "It is a positive step politically and should help defuse
the discontent amongst the great majority of the peaceful
protesters," said Citigroup emerging market strategists Dirk
Willer and Kenneth Lam. 
    "Given how long the process will be, and how over-sold CLP
is, we believe this is short-term CLP positive." 
    The positive sentiment, coupled with a weakness in the
dollar, lifted other currencies in the region, with the
Colombian peso jumping 1% after five sessions of losses.

    Mexico's peso rose 0.6% to extend gains after the
central bank's 25-basis point interest rate cut on Thursday was
less aggressive than some had feared.
    While the bank gave little reason to believe it will not
continue a 25-basis point per meeting easing path, "we continue
to believe that an increment to a 50 bps pace of easing will
remain off the table for now," said Sacha Tinhayi, deputy head
of EM strategy at TD Securities.
    The moves were also in line with an uptick in global
sentiment on a return of optimism around a phase one U.S.-China
trade deal. White House adviser Larry Kudlow said the two sides
were getting close to an agreement and that "the mood music is
pretty good." 
    Financial markets in Brazil were closed for a local holiday.
    Key Latin American stock indexes and currencies at 1903 GMT:
 Stock indexes                                  daily % change
 MSCI Emerging Markets                1049.22             0.67
 MSCI LatAm                           2685.75             1.02
 Brazil Bovespa                             -                -
 Mexico IPC                          43318.10              0.3
 Chile IPSA                           4862.40             8.09
 Argentina MerVal                    31838.94            2.641
 Colombia IGBC                       13220.45             0.25
 Currencies                                     daily % change
 Brazil real                                -                -
 Mexico peso                          19.2199             0.48
 Chile peso                             776.9             3.46
 Colombia peso                        3423.45             0.79
 Peru sol                               3.363             0.71
 Argentina peso (interbank)           59.6700             0.06
 (Reporting by Susan Mathew and Medha Singh in Bengaluru;
Editing by Nick Zieminski and Dan Grebler)
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