August 12, 2019 / 2:54 PM / a month ago

EMERGING MARKETS-Carnage in Argentine markets after Macri suffers blow in primaries

    * Argentina's peso hits record low
    * Merval index plummets nearly 10% 
    * Bleak chances of Macri winning October elections 

    By Agamoni Ghosh
    Aug 12 (Reuters) - Argentina's peso collapsed on
Monday after voters rejected President Mauricio Macri's austere
economic policies and gave Alberto Fernandez and his running
mate, former President Cristina Fernandez de Kirchner, a victory
in  presidential primaries on Sunday. 
    The peso fell to a record low, as much as 30% against
the dollar in early trade, as Macri lost by a far greater margin
than expected. 
    The result cast serious doubt on Macri's chances of
re-election for a second term in October, with analysts warning
of widespread panic in financial markets in the coming days. 
     "This result is much more extreme than our market bear case
scenario," BAML analysts said in a note.
    "Fernandez has emphasized the peso is extremely over-valued
and needs a correction. We expect heavy pressure in ARS with a
potential devaluation in coming weeks."
    The carnage was a reminder for markets of a 26% plunge in
the peso on Dec. 17, 2015, when the newly elected Macri
government floated the currency as part of a slew of promised
free-market reforms aimed at aiding the crisis-ridden economy.
    Shares on the Merval index opened 9% lower, with
cement producer Loma Negra, financial conglomerate
Grupo Supervielle SA and electricity distributor Pampa
Energia SA, all dropping over 30%. 
    The steep moves in Argentina pressured the Latin American
index of currencies, which dropped over 2%,
while stocks fell over 4%. 
    Brazil's real fell below the 4.00 per dollar for the
first time since late May, feeling the heat from its neighboring
market's volatility, while Mexico's peso lost over 1%.
    Chile's peso fell nearly 1.5%, with dropping copper
prices adding pressure on the world's largest producer of the
red metal.   
    All major stock indices were in the red, but Colombia's IGBC
index managed to outperform, only 0.1% lower compared
with its Latin American peers. 
 
  Key Latin American stock indexes and currencies at 1440 GMT:
    
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets       972.81    -0.85
                                     
 MSCI LatAm                 2651.24    -4.18
                                     
 Brazil Bovespa           101904.97    -2.01
                                     
 Mexico IPC                39941.90    -1.19
                                     
 Chile IPSA                 4808.06    -2.14
                                     
 Argentina MerVal          39631.80      -10
                                     
 Colombia IGBC             12492.79     -0.1
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.0017    -1.55
                                     
 Mexico peso                19.6282    -1.16
                                     
 Chile peso                   717.8    -0.93
                                     
 Colombia peso               3433.8    -1.19
                                     
 Peru sol                     3.396    -0.47
                                     
 Argentina peso             57.0000   -25.54
                                     
 

 (Reporting by Agamoni Ghosh and Susan Mathew in Bengaluru;
editing by Jonathan Oatis)
  
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