December 26, 2017 / 4:40 PM / a month ago

EMERGING MARKETS-Argentina stocks hit new record high but peso plunges

    By Bruno Federowski
    SAO PAULO, Dec 26 (Reuters) - Argentine shares hit a new
record high after its Congress approved key business-friendly
legislation, but the peso plummeted to an all-time low due to
seasonal demand for U.S. dollars.
    Lawmakers last week approved a reform of the country's
pension system despite days of demonstrations by the bill's
opponents, while the legislature's lower house approved a plan
for cutting corporate income and employer social security taxes.

    The measures are central to President Mauricio Macri's plan
to slash the fiscal deficit and attract foreign investment. It
paves the way for further market-friendly legislation that his
"Let's Change" coalition hopes to pass in extraordinary
congressional sessions before year-end.
    The benchmark MerVal index jumped much as 1.84
percent to a fresh record high of 29,465.27, and rising for a
sixth straight session.
    But the Argentine peso slid 1.2 percent as
companies purchased U.S. dollars to settle year-end obligations
and pay dividends.
    Trading in other Latin American markets was muted, in
between the Christmas and New Year's holidays.
    Shares in Brazilian planemaker Embraer SA rose
2.5 percent on lingering expectations of a potential tie-up with
Boeing Co.
    Boeing on Friday sought to calm Brazilian concerns about a
potential tie-up with Embraer after President Michel Temer and
other officials warned they would veto any full takeover bid for
the manufacturer of regional jets.
    While Temer said he would welcome an injection of foreign
capital into Embraer, his warning was the latest reminder that
the company, which also makes some military planes, was one of
the more successful products of Brazilian industrial policy and
remains a focus of national pride.
    
    Key Latin American stock indexes and currencies at 1600 GMT:
 Stock indexes                     Latest       Daily  YTD pct
                                                  pct   change
                                               change  
 MSCI Emerging Markets              1,138.71    -0.21    32.34
 MSCI LatAm                         2,782.77     0.07    18.81
 Brazil Bovespa                    75,537.33     0.47    25.42
 Mexico S&P/BVM IPC                48,588.74     0.41     6.45
 Chile IPSA                         5,508.40    -0.53    32.69
 Chile IGPA                        27,714.71    -0.49    33.67
 Argentina MerVal                  29,458.22     1.82    74.12
 Colombia IGBC                     11,217.79    -0.29    10.76
 Venezuela IBC                      1,271.27     1.04   -95.99
                                                              
 Currencies                           Latest    Daily  YTD pct
                                                  pct   change
                                               change  
 Brazil real                          3.3179     0.47    -2.07
 Mexico peso                         19.7275    -0.14     5.15
 Chile peso                            618.3     0.73     8.47
 Colombia peso                      2,960.55    -0.12     1.38
 Peru sol                              3.238    -0.09     5.44
 Argentina peso (interbank)          18.3050    -1.17   -13.28
                                                       
 Argentina peso (parallel)             18.62    -1.72    -9.67
                                                       
 
 (Reporting by Bruno Federowski, editing by G Crosse)
  
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