November 20, 2019 / 7:20 PM / 8 months ago

EMERGING MARKETS-Mexican peso leads losses in Latam FX on U.S.-China trade standoff

    * Trade deal may not be completed this year - sources
    * U.S. bill on Hong Kong human rights angers China
    * Mexican peso hits 6-week low

 (Updates prices; adds details, quote)
    By Medha Singh
    Nov 20 (Reuters) - Latin American assets moved lower on
Wednesday as investors fled risky bets after a report that an
initial trade deal between United States and China may not be
completed this year.
    The tariff-sensitive Mexican peso hit its weakest
level in six weeks against a steady dollar. Markets in
Brazil, the region's biggest economy, remained shut for a
    Completion of a "phase one" U.S.-China trade deal could
slide into next year, trade experts and people close to the
White House told Reuters, as Beijing presses for more extensive
tariff rollbacks, and the Trump administration counters with
heightened demands of its own.
    This comes ahead of the next round of U.S. tariffs on
Chinese imports, including holiday gift items like electronics
and Christmas decorations, due on Dec. 15.
    "The hope has been in the market that a phase one deal would
be done before that," said Scott Ladner, chief investment
officer at Horizon Investments in Charlotte, North Carolina.
    "It brings into the realm of probability that those tariffs
would come into effect. That's something the market is
unprepared for."
    The report added to jitters after the U.S. Senate passed a
bill meant to protect human rights in Hong Kong, which drew
China's criticism.
    Emerging markets assets have broadly risen this quarter on
hopes that the world's top two economies will strike a trade
deal to end a damaging tariff war.
    Chilean peso dropped 0.8% as signs of civil unrest in
the country showed no signs of abating. The peso has dropped
more than 10% since Oct. 21 when widespread protests against
social inequality in the country turned violent. 
    The increasing uncertainty in Chile will impact "economic
growth next year but we are far away for a serious questioning
of the Chilean model which was so successful in the last few
decades," said Luiz Ribeiro, head of Latin American equities at
DWS Group.
    Stock in the region were also mostly lower with Mexico's IPC
 and Chile's IPSA down. Bucking the trend,
Argentina's Merval rose 2.8%.
    Key Latin American stock indexes and currencies at 1900 GMT:
 Stock indexes                                   daily % change
 MSCI Emerging Markets            1051.43                 -0.54
 MSCI LatAm                       2659.66                  0.07
 Brazil Bovespa                         -                     -
 Mexico IPC                      43539.65                 -0.14
 Chile IPSA                       4786.34                 -0.12
 Argentina MerVal                33319.57                 3.308
 Currencies                                      daily % change
 Brazil real                            -                     -
 Mexico peso                      19.4858                 -0.77
 Chile peso                         792.6                 -0.71
 Colombia peso                     3441.1                 -0.12
 Peru sol                           3.382                 -0.18
 Argentina peso                   59.7150                 -0.03

 (Reporting by Medha Singh in Bengaluru, additional reporting by
Sinead Carew in New York)
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