* Chile’s economic activity index up 0.3% in October * Mexico ETF posts strongest monthly inflows since 2016 * Brazil set to maintain current rate cut pace – central bank director * Latam stocks up 1.3%, FX up 1% (Updated at 3pm ET/2000 GMT) By Johann M Cherian Dec 1 (Reuters) – Most Latin American stocks and currencies jumped on Friday, kickstarting December on strong footing as investors ramped up bets that a likely dovish policy tilt from the Federal Reserve would boost risk assets. Traders added to bets on a March 2024 start to Fed rate cuts after Chair Jerome Powell said in closely watched remarks that rate hikes were achieving what was hoped, though he vowed to move “carefully.” MSCI’s index tracking Latin American equities gained 1.3% in afternoon trading, after notching its best month since 2020 in November on hopes that U.S. interest rates have peaked. A basket of regional currencies strengthened 1% as the dollar and U.S. Treasury yields fell. Both indexes were set for weekly gains, with the stocks index up 1% and currencies edging up 0.4%. More broadly, Bank of America analysts said that emerging market fixed income assets saw outflows of $59 million, in its 18th straight week, while stocks saw outflows of $1.2 billion, its eighth straight week of losses. Meanwhile, the real reversed earlier losses and gained 0.9% after Brazilian central bank director Diogo Guillen said current pace of 50-basis-point rate cuts per meeting will remain in place for the next few meetings. Separately, data showed industrial production rose by a less-than-expected 0.1% in October, pointing to a sluggish start to the fourth quarter. “Today’s numbers serve as a reminder that risks are still biased to the downside and that the COPOM (central bank) will have to accelerate the pace of monetary easing, assuming fiscal and external conditions remain benign,” said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics. Brazil’s Bovespa reversed earlier losses, rising 0.5%. Shares of state-owned oil firm Petrobras slipped 0.5% after the company’s chief executive said Brazil is expected to join the OPEC+ group of oil-producing countries in January but would not take part in the group’s coordinated output caps. Mexico’s benchmark index shed 0.4% after the country’s president said the minimum wage will rise 20% next year, which analysts said would add to inflationary pressures. Still, a sharp rally in Mexican shares and optimism around companies moving to the Latin American country to be closer to the U.S. have spurred buying into exchange-traded funds (ETF) focused on local stocks, with iShares MSCI Mexico ETF posting its strongest month of inflows in seven years. Chile’s peso strengthened nearly 2% after the IMACEC economic activity index rose 0.3% in October. Argentina’s Merval index gained 6.8%, but was on track for weekly losses of 5.4% after jumping over 42% the week prior. Latin American stock indexes and currencies at 2000 GMT: Latest Daily % change MSCI Emerging Markets 984.76 -0.24 MSCI LatAm 2504.57 1.34 Brazil Bovespa 127928.84 0.47 Mexico IPC 53823.49 -0.44 Chile IPSA 5886.71 1.17 Argentina MerVal 868882.02 6.822 Colombia COLCAP 1149.46 0.23 Currencies Latest Daily % change Brazil real 4.8776 0.02 Mexico peso 17.1967 1.06 Chile peso 854.9 1.93 Colombia peso 3963.99 1.10 Peru sol 3.7213 0.12 Argentina peso 361.0500 -0.15 (interbank) Argentina peso 935 -3.21 (parallel) (Reporting by Johann M Cherian and Lisa Mattackal in Bengaluru; editing by Jonathan Oatis and Grant McCool)
