January 31, 2020 / 3:46 PM / in 25 days

EMERGING MARKETS-Brazil leads Latam assets lower as China epidemic fans growth fears

    * Brazil stocks fall over 1%, real hits record low
    * WHO declares coronavirus global health emergency
    * China's measures to contain virus will be effective -
analyst
    * Chilean stocks gain on upbeat economic data

    By Sagarika Jaisinghani and Ambar Warrick
    Jan 31 (Reuters) - Brazilian equities shed over 1% on
Friday, while the real hit a new record low, as investors grew
anxious about economic growth after the China coronavirus
outbreak was declared a global health emergency.
    A basket of Latin American stocks was down
1.6%, eyeing its biggest weekly decline in over five months,
while its counterpart tracking regional currencies
 was off about 0.2%.
    The coronavirus epidemic, which first emerged in China's
Hubei province, has now spread to 23 countries and has claimed
over 200 lives, prompting travel restrictions from the United
States and other countries.
    Although the World Health Organization declared the virus a
global emergency on Thursday, it opposed restrictions on travel
and trade with China and praised Beijing's efforts to contain
the outbreak.
    "We believe China's aggressive measures to contain the virus
will ultimately prove effective," said Mark Haefele, chief
investment officer at UBS Global Wealth Management.
    "In our base case, we expect the outbreak of the virus not
to cause a global economic slowdown and as such risk assets
should stay well supported over the next six months."
    Still, risk appetite was dented on Friday after several
businesses said they were facing supply problems because of the
virus, with the travel, tourism and retail sectors being hit
particularly hard.
    The Brazilian stock index was on course for its
first monthly decline in five, also pressured by sluggish
economic growth. The real, which has eased for three days
in a row, hit an all-time low of 4.2791 to the dollar.
    "The main sign that (the real) could be oversold is a strong
devaluation since the coronavirus outbreak," said Wilson
Ferrarezi, economist at TS Lombard in Sao Paulo.
    The Brazilian central bank cut interest rates aggressively
last year in order to kick-start the economy. A new Reuters poll
on Friday showed economists expected the bank to cut rates again
when it meets next week.
    Predictions of the rate cut were also making Brazil's
currency less attractive for a carry trade, Ferrarezi added.
    The Chilean peso, which is sensitive to fluctuations
in copper, eased 0.2% as prices of the red metal remained near
five-month lows on worries about demand from its top consumer,
China.
    In a bright spot, Chilean equities added about
0.4%, as data showed manufacturing production rose for a second
straight month in December, bucking dire predictions of a slump
in output following nearly two months of protests.
    The Argentinian MerVal was down about 0.4%, while
Colombian equities fell 0.2%.
    
    Key Latin American stock indexes and currencies at 1515 GMT:
    Stock indexes             Latest    Daily % change
 MSCI Emerging Markets         1060.99            -1.1
                                        
 MSCI LatAm                    2757.73           -1.55
                                        
 Brazil Bovespa              113543.46           -1.72
                                        
 Mexico IPC                   44464.10           -0.89
                                        
 Chile IPSA                    4570.81            0.44
                                        
 Argentina MerVal             40243.85          -0.374
                                        
 Colombia COLCAP               1635.39           -0.17
                                        
                                                      
       Currencies             Latest    Daily % change
 Brazil real                    4.2734           -0.37
                                        
 Mexico peso                   18.8850           -0.60
                                        
 Chile peso                      797.9           -0.20
                                        
 Colombia peso                 3422.21           -0.39
 Peru sol                       3.3758           -0.32
                                        
 Argentina peso                60.3200           -0.11
 (interbank)                            
                                        
 
 (Reporting by Sagarika Jaisinghani in Bengaluru; Editing by
Andrea Ricci)
  
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