November 5, 2019 / 8:10 PM / 4 months ago

EMERGING MARKETS-Latam FX slides but Brazil's real bolstered by fiscal reform bill

 (Recasts throughout, updates prices, adds quote)
    * JBS shares plunge after request to annul plea bargain 
    * Brazil govt proposes market-friendly reforms
    * Chile President Pinera says will not resign - BBC

    By Agamoni Ghosh and Medha Singh
    Nov 5 (Reuters) - Latin American currencies broadly weakened
on Tuesday after an improvement in service sector activity in
the United States fired up the dollar, but Brazil's real
outperformed on expectations of new market-friendly reforms.
    A reading of the ISM services index in the U.S. improved in
October, easing some concerns about a slowdown in the world's
largest economy and lifting the greenback.
    MCSI's index tracking currencies in the Latam region
 fell 0.5% to extend losses from the previous
    Mexico's peso fell to a three-week low, while Chile's
peso fell nearly 1% on uncertainty surrounding the
country's political stability. 
    Chile's embattled President Sebastian Pinera rejected the
notion of resigning and believes he will reach the end of his
term in just over two years despite intense anti-government
protests that are roiling the country, according to a BBC
    Latin American stocks fell 0.4% with
Brazil's Bovespa coming off record highs. 
    Brazilian food processor JBS dropped about 5%
after the country's top prosecutor requested the annulment of
plea bargain deals previously signed with former executives of
the company.
    Mexican stocks slid 0.6% with telecommunications
group America Movil down 2.6% as HSBC downgraded the
stock to "hold" from "buy".
    Brazil's real firmed 0.7% to outperform its Latin
American peers on hopes that the government's newly proposed
reforms will help bring down the country's mounting fiscal
    Economy Minister Paulo Guedes unveiled a bundle of
wide-ranging reforms on Tuesday, aimed at cutting spending and
changing budget rules in a drive to reduce the government's
chronic fiscal deficit.
    While the proposal was widely expected by economic and
political analysts, the approval of the reform is not fully
priced in, said Rabobank's Brazil economist Gabriel Santos in a
note, indicating that many investors are skeptical that an
effective bill will reach the finish line.
    President Jair Bolsonaro and his economy minister hope the
proposals will be approved by next year, building on the
momentum from a landmark pension reform that was passed by
Congress in September. 
    Latin American stock indexes and currencies at 19:35 GMT
 Stock indexes                                 daily % change
 MSCI Emerging Markets             1070.81               0.59
 MSCI LatAm                        2819.02              -0.39
 Brazil Bovespa                  108626.95              -0.14
 Mexico IPC                       43572.96              -0.55
 Chile IPSA                        4729.99              -1.49
 Argentina MerVal                 36830.97             -1.201
 Colombia IGBC                    13499.88               0.98
 Currencies                                    daily % change
 Brazil real                        3.9905               0.52
 Mexico peso                       19.2063              -0.17
 Chile peso                          748.7              -1.00
 Colombia peso                        3307               0.39
 Peru sol                            3.337              -0.15
 Argentina peso (interbank)        59.6500               0.09

 (Reporting by Agamoni Ghosh and Medha Singh in Bengaluru;
Editing by Andrea Ricci)
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