June 6, 2018 / 3:56 PM / 4 months ago

EMERGING MARKETS-Brazilian real skids as election worries add to pessimism

    SAO PAULO, June 6 (Reuters) - Brazil's real currency
hit a new two-year low on Wednesday, even as its Latin American
peers gained against a weakened dollar, underlining the level of
investor concern for a country coming off a massive truckers'
strike and heading toward an unsettled election.
    Brazilian equities and the real have had a tough few weeks
after a truckers' protest hit all sectors of the economy, while
increasing state intervention in state oil major Petroleo
Brasileiro SA underlined the weakened position of the
market-friendly government.
    A poll released on Tuesday heightened investors' concern
about general elections in October. It showed right-winger Jair
Bolsonaro and leftist Ciro Gomes as the front-runners, while
Geraldo Alckmin and Joao Doria, relative centrists who would be
welcomed by investors, lagged.
    "Clearly, the mood has changed," said Flavio Serrano, a
senior economist at Haitong Banco de Investimento in Sao Paulo.
"There's a negative outlook on Brazil, with regard to the
political situation and the economy."
    Brazil's real had fallen 0.38 percent by late morning,
trading at 3.82 reais to the dollar, its lowest level since
March 2016. The country's benchmark Bovespa index fell
as much as 1.5 percent, by far the biggest loser in the region,
with losses well spread across sectors.
    Shares in food processor BRF SA fell some 2.2
percent, shedding recent gains, after BRF and competitor Minerva
SA denied recent reports they were planning a merger.

    Among the major gainers in Latin American currency markets
on Wednesday was the Mexican peso, which rose 0.68
percent, as traders took a breather after rocky North American
Free Trade Agreement (NAFTA) news in recent weeks sent the
currency skidding.
      
Key Latin American stock indexes and currencies at 1512 GMT:
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1150.40      0.52     -1.21
                                                  
 MSCI LatAm                    2509.13     -1.07    -10.32
                                                  
 Brazil Bovespa               75709.35     -1.22     -0.91
                                                  
 Mexico IPC                   45210.26      0.18     -8.40
                                                  
 Chile IPSA                    5510.19     -0.23     -0.98
                                                  
 Chile IGPA                   27883.73     -0.16     -0.35
                                                  
 Argentina MerVal             30536.97      0.59      1.57
                                                  
 Colombia IGBC                12345.11     -0.35      8.57
                                                  
 Venezuela IBC                37879.32      0.52   2898.82
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.8240     -0.38    -13.36
                                                  
 Mexico peso                   20.3100      0.68     -3.01
                                                  
 Chile peso                        628      0.64     -2.13
                                                  
 Colombia peso                 2825.73      0.93      5.53
 Peru sol                         3.26      0.25     -0.71
                                                  
 Argentina peso                24.9100      0.20    -25.33
 (interbank)                                      
                                                  
 Argentina peso                  25.65      0.97    -25.03
 (parallel)                                       
                                                  
 

 (Reporting by Gram Slattery and Claudia Violante; editing by
Jonathan Oatis)
  
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