EMERGING MARKETS-Latam stocks fall, set for worst week in 9 months on global banking shocks
By Shreyashi Sanyal March 17 (Reuters) – Latin American stocks fell on Friday at the end of a tumultuous week in which investors fled riskier assets on fears of a meltdown in the global financial sector, while Peru’s sol emerged as a bright spot as copper prices held steady. The MSCI’s index for Latin American equities declined 1.2%, as sentiment remained fragile after a roller-coaster week sparked by the failure of Silicon Valley Bank in the United States and concerns over the future of Swiss lender Credit Suisse despite a $54 billion lifeline from Switzerland’s central bank. The Latam stock index has fallen in six of the last seven trading sessions and is set to clock its worst weekly performance since June. Brazil’s Bovespa stock index, which houses some of central and south America’s biggest lenders, shed 1.5%. Unibanco Holding SA, Banco do Brasil SA , Bradesco SA and BTG Pactual SA fell between 1.5% and 3.5%. Stocks in Latin America’s second-largest economy, Mexico fell more than 1%. Mexico is also closely integrated with the U.S. economy, relying on it for a steady stream of remittances and trade. Most major Latin American currencies also slid against a weakening dollar even though markets now expect the Federal Reserve to raise interest rates by only 25 basis points next week. Prior to the banking crisis, there was widespread speculation the U.S. central bank could deliver a 50-basis-point hike. Chile’s peso slipped 1.6%, as investors assessed two tough weeks for the country that saw a magnitude 5.6 earthquake and the rejection of a proposed tax reform meant to finance key elements of President Gabriel Boric’s leftist agenda. “Rejection may lead to moderation in reforms, spending and tax burden. But this also reflects governability issues amid a highly fragmented Congress,” Sebastian Rondeau, Latam economy and fixed income strategy director at Bank of America. “While moderation is the most likely outcome of this setback, and thus positive, it could also put some pressure on the finance ministry in the future.” Brazil’s real dropped 0.8%, while Mexico’s peso fell 1.2%. Data showed Brazil’s jobless rate rose to 8.4% in the three months through January, slightly above market expectations. Peru’s sol, however, rose 0.2% taking its cues from higher prices for copper, the country’s top export. Bolivian government bond spreads, a reflection of how risky investors see those securities, have opened to the widest in at least a decade, as the South American country battles against a sharp fall in foreign currency reserves. Among other emerging markets, Russia’s central bank held its key interest rate at 7.5%, maintaining its hawkish rhetoric. The rouble fell. Key Latin American stock indexes and currencies at 1553 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 950.86 1.01 MSCI LatAm 2079.07 -1.07 Brazil Bovespa 101874.1 -1.51 0 Mexico IPC 51924.52 -1.11 Chile IPSA 5209.87 0.24 Argentina MerVal 218580.2 -2.152 5 Colombia COLCAP 1116.63 -0.16 Currencies Latest Daily % change Brazil real 5.2759 -0.73 Mexico peso 18.9451 -1.28 Chile peso 834.9 -1.50 Colombia peso 4847.82 -0.48 Peru sol 3.798 -0.61 Argentina peso (interbank) 203.3500 -0.20 Argentina peso (parallel) 379 1.06 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Paul Simao)
