January 28, 2019 / 2:36 PM / 8 months ago

EMERGING MARKETS-Bovespa down as Vale plummets on dam disaster; Latam FX weakens

    By Agamoni Ghosh
    Jan 28 (Reuters) - Stocks in Brazil fell on Monday as shares
of Vale plummeted, wiping out nearly $14 billion of the
company's market value, in the wake of a dam burst at one of its
mines in Brazil that killed at least 60 people and left about
300 missing.
    A soft U.S. dollar did little to help developing world
currencies as investors gauged market volatility ahead of the
U.S. Federal Reserve's policy meeting and U.S-China trade talks
this week.
    Brazil's Bovespa index, which has been one of the
best performing indexes this year slipped more than 2 percent,
as Vale, the world's biggest producer of iron ore,
fell as much as 20 percent, a record intra-day plunge in the
company's shares.
    Shares of holding company Bradespar, one of
Vale's main shareholders, also declined sharply.  
    The dam disaster is being perceived as a huge blow to Vale
and its Chief Executive Fabio Schvartsman, as investors fret
about the financial damages the company may have to
    "The intangible aspect of this incident is what worries us
the most, and at the end of the day the entire mining industry
will need to rethink the current model," said analysts Leonardo
Correa and Gerard Roure of Brazilian investment banking firm BTG
    Vale's board has already halted payments and bonuses to
executives as well as suspended its shareholder compensation,
while Brazil's top prosecutor has said executives of the firm
may face criminal charges.
    This is the second such disaster in Brazil involving Vale in
just over three years. Nineteen people were killed in 2015 when
a dam collapsed at a Vale joint venture with BHP.
    Brazil's real fell 0.2 percent after data showed the
country's current account deficit for 2018 was slightly below
the central bank's estimates, while foreign direct investment
was better that expected. 
    Mexico's peso weakened for the first time in five
sessions, while Chile's peso fell marginally in line with
a slide in the price of copper, the country's main export. 
    Stocks in Chile fell 0.3 percent, led by
declines in shares of Banco de Credito e Inversiones.
Key Latin American stock indexes and currencies at 1400 GMT 
 Stock indexes                                daily %
                              Latest           change
 MSCI Emerging Markets            1028.80       -0.34
 MSCI LatAm                       2837.49       -1.42
 Brazil Bovespa                  95782.14       -2.44
 Mexico IPC                             -           -
 Chile IPSA                       5420.27       -0.39
 Argentina MerVal                       -           -
 Colombia IGBC                          -           -
 Currencies                                   daily %
 Brazil real                       2.6452       -0.21
 Mexico peso                      19.0296       -0.26
 Chile peso                         669.3       -0.33
 Colombia peso                          -           -
 Peru sol                               -           -
 Argentina peso (interbank)             -           -


 (Reporting by Agamoni Ghosh in Bengaluru
Additional reporting by Paula Arend Laier in Sao Paulo
Editing by Paul Simao)
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