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Susan Mathew

EMERGING MARKETS-Chilean assets zoom on constitution deal; Latam FX to snap 9 day losing streak

16 Nov 2019

* Chilean peso on way to best day in more than a decade * Latin American FX set to snap out of 9 days of losses * Brazil markets shut for holiday (Updates prices) By Susan Mathew Nov 15 A surge in Chilean assets lifted Latin American markets on Friday after lawmakers agreed to hold a referendum to replace a dictatorship-era constitution, while optimism on the U.S.-China trade front also lifted the mood. Chile's stock index soared nearly 8%, on track to post its biggest one-day gain in 11 years. The peso jumped 4%, putting the broader Latin American index in positive territory for the first time in 10 sessions. The currency has lost 11.4% since Oct. 21, when protesters turned to vandalism after a hike in public transport fares sparked a wider unrest over economic inequality in one of Latin America's most stable nations. Bowing to one of the demands, lawmakers signed an agreement to hold a referendum next April in which voters will be asked whether they approve the idea of a new constitution and whether current lawmakers should serve on the commission that would redraft the document. "It is a positive step politically and should help defuse the discontent amongst the great majority of the peaceful protesters," said Citigroup emerging market strategists Dirk Willer and Kenneth Lam. "Given how long the process will be, and how over-sold CLP is, we believe this is short-term CLP positive." The positive sentiment, coupled with a weakness in the dollar, lifted other currencies in the region, with the Colombian peso jumping 1% after five sessions of losses. Mexico's peso rose 0.6% to extend gains after the central bank's 25-basis point interest rate cut on Thursday was less aggressive than some had feared. While the bank gave little reason to believe it will not continue a 25-basis point per meeting easing path, "we continue to believe that an increment to a 50 bps pace of easing will remain off the table for now," said Sacha Tinhayi, deputy head of EM strategy at TD Securities. The moves were also in line with an uptick in global sentiment on a return of optimism around a phase one U.S.-China trade deal. White House adviser Larry Kudlow said the two sides were getting close to an agreement and that "the mood music is pretty good." Financial markets in Brazil were closed for a local holiday. Key Latin American stock indexes and currencies at 1903 GMT: Stock indexes daily % change Latest MSCI Emerging Markets 1049.22 0.67 MSCI LatAm 2685.75 1.02 Brazil Bovespa - - Mexico IPC 43318.10 0.3 Chile IPSA 4862.40 8.09 Argentina MerVal 31838.94 2.641 Colombia IGBC 13220.45 0.25 Currencies daily % change Latest Brazil real - - Mexico peso 19.2199 0.48 Chile peso 776.9 3.46 Colombia peso 3423.45 0.79 Peru sol 3.363 0.71 Argentina peso (interbank) 59.6700 0.06 (Reporting by Susan Mathew and Medha Singh in Bengaluru; Editing by Nick Zieminski and Dan Grebler)

European shares clock sixth weekly gain on trade cheer

15 Nov 2019

European shares clocked a sixth-straight week of gains on Friday following record highs on Wall Street after bullish comments from a White House official on U.S.-China trade talks.

EMERGING MARKETS-Chile markets zoom on constitution deal, Mexican peso up

15 Nov 2019

By Susan Mathew Nov 15 Chilean stocks catapulted nearly 7% and the country's currency looked poised for its best day in more than 10 years on Friday after lawmakers agreed to hold a referendum to replace a dictatorship-era constitution. The stock index inched closer to posting its biggest one-day gain in 11 years, while the currency jumped 3% to 781.22 per dollar. The currency has lost 11.4% since Oct. 21, when protesters turned to vandalism after a hike in public transport fares sparked a wider unrest regarding economic inequality in one of Latin America's most stable nations. The currency has been in a free-fall over the last six-sessions when it breached 800 to dollar. Bowing one of the demands, lawmakers signed an agreement to hold a referendum next April where voters will be asked whether they approve the idea of a new constitution and whether current lawmakers should serve on the commission that would redraft the document. "It is a positive step politically and should help defuse the discontent amongst the great majority of the peaceful protesters," said Citigroup emerging market strategists Dirk Willer and Kenneth Lam. "Given how long the process will be, and how oversold CLP is, we believe this is short-term CLP positive. In the medium term, there are major (fiscal) risks from the new constitution, but that is for another day given the long time line." The sentiment spread through the region, with the Colombian peso jumping 1% after five sessions of losses against a steady dollar. Mexico's peso rose 0.6% to extend gains after the central bank's 25 basis points interest rate cut on Thursday was less aggressive than some had feared. While the bank gave little reason to believe that they will not continue a 25 basis point per meeting easing path, "we continue to believe that an increment to a 50bps pace of easing will remain off the table for now," said Sacha Tinhayi, deputy head of EM strategy at TD Securities. "The central bank's still obvious concern with the peso's stability, and the risks to passing depreciatory shocks through to inflation... suggests that policy makers will be very selective of when they increment easing momentum, if at all." The moves were also in line with an uptick in global sentiment on a return of optimism around a phase one U.S.-China trade deal being struck. White House advisor Larry Kudlow said aid the two sides were getting close to an agreement and that "the mood music is pretty good". Financial markets in Brazil were closed for a local holiday. Key Latin American stock indexes and currencies at 1420 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1047.81 0.53 MSCI LatAm 2678.25 0.74 Mexico IPC - - Chile IPSA 4775.82 6.16 Argentina MerVal - - Colombia IGBC - - Currencies Latest Daily % change Mexico peso 19.2097 0.54 Chile peso 781.1 2.91 Colombia peso 3415.77 1.02 Peru sol 3.3718 0.45 Argentina peso 59.6900 0.03 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Nick Zieminski)

EMERGING MARKETS-Stocks, currencies gain as trade optimism returns

15 Nov 2019

Nov 15 Emerging market stocks rose for the first time in three days on Friday on renewed hopes that the United States and China were close to signing a trade deal to end a prolonged tariff war that has tempered global growth.

EMERGING MARKETS-Latam FX weakens on growth fears, rate cut expected in Mexico

14 Nov 2019

* Chile peso hits new low as unrest goes on * Weak China, Germany data spark growth concerns * Mexico peso, Brazil real track global currencies lower * Brazil, Chile, Colombia stocks gain By Sagarika Jaisinghani and Susan Mathew Nov 14 Mexico's peso slipped ahead of a central bank meeting on Thursday where policymakers are widely expected to cut rates while the Chilean peso hit a new low as widespread anti-government protests showed no signs of abating. An index of Latin American currencies fell for the ninth straight session as a sharp slowdown in China's factory output in October and persistent weakness in Germany's economy sparked fears of sluggish global growth. The Mexican peso shed 0.5% in the run up to the meeting of the Bank of Mexico, known as Banxico. Analysts expect it to cut the country's benchmark lending rate for the third time this year. But a broad rise in longer-dated bond yields over the past month suggests Mexico's economic outlook has improved relatively, easing "pressure on policy makers to cut more than 25 bp today," Morgan Stanley analyst James Lord wrote in a note. "The recent events in the Andean region that have negatively impacted broader LatAm sentiment could also be a factor prompting a more cautious approach from Banxico." The Chilean peso hit an all-time low of 807.60 to the dollar despite measures announced by the central bank to boost liquidity in the financial system after weeks of often violent social unrest. The currency is on course for six straight sessions of declines, its longest losing streak since Aug 5. But Chile's dollar-denominated bonds strengthened after the report. "This program (by Chile's central bank) is better than surprise interventions in the foreign exchange market and is likely to soothe, to an extent, concerns regarding further peso depreciation," Credit Suisse analyst Alonso Cervera said. In Brazil, the real extended losses for the third session in a row, shrugging off data showing an acceleration in economic activity in September and tracking global currencies lower as weak indicators from major economies reflected the fallout from the Sino-U.S. trade war. Investors have been rattled this month as few details have emerged about a potential truce. China said on Thursday it was holding "in-depth" talks with Washington and cancelling tariffs was an important condition for a deal. The Colombian peso sank to a one-month low ahead of third-quarter GDP figures due later in the day. A rise in stocks in Brazil, Chile, Argentina and Colombia helped boost the wider index tracking Latin American shares by 0.3%. Key Latin American stock indexes and currencies at 1449 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1042.27 -0.15 MSCI LatAm 2661.06 0.27 Brazil Bovespa 106540.10 0.45 Mexico IPC - - Chile SPIPSA 4484.18 1.63 Argentina MerVal 32700.40 1.112 Colombia IGBC 13272.70 0.22 Currencies Latest Daily % change Brazil real 4.1843 -0.35 Mexico peso 19.4448 -0.49 Chile peso 804.8 -1.01 Colombia peso 3448.93 -0.70 Peru sol 3.3908 -0.08 Argentina peso (interbank) 59.7100 0.03 (Reporting by Sagarika Jaisinghani and Susan Mathew in Bengaluru; Editing by David Clarke)

EMERGING MARKETS-Stocks fall as Hong Kong protests go on; Turkish lira weakens

14 Nov 2019

Nov 14 Anti-government protests in Hong Kong led to a decline by emerging-market stocks on Thursday, while the Turkish lira fell after President Tayyip Erdogan's visit to Washington did little to ease concerns about ties with the United States.

EMERGING MARKETS-Chile peso slumps to record low; Trump trade speech eyed

12 Nov 2019

* Chile stocks touch 2-1/2 year low * Brazil, Mexico currencies fall as Trump speech awaited * Planemaker Embraer hits one-month low after results * Focus on Mexican central bank meeting on Thursday By Sagarika Jaisinghani and Susan Mathew Nov 12 Chile's peso sank 4% to a record low on Tuesday as massive anti-government street protests showed signs of intensifying further, while currencies in Brazil and Mexico dropped as the dollar strengthened ahead of a speech by U.S. President Donald Trump on trade later in the day. The Chilean peso fell to 790.98 against the dollar, while stocks slumped to a two-and-a-half-year low, after state workers signalled they were not satisfied with the government's decision to rewrite the country's dictatorship-era constitution. The currency has now fallen for four straight sessions, losing more than 5% this week, as the South American country has been racked by almost a month of unrest that has left at least 20 dead and wreaked billions of dollars of damage to public infrastructure and private businesses. "I thought the measures announced last week would provide a bit of stability and we'd calm down around 750 (pesos to the dollar)," said Christian Lawrence, senior market strategist, Latam FX at Rabobank. "But things have intensified, which means we are now in a situation where we'd have to be very very brave to sell dollar-CLP." The gloom was felt across other Latin American economies, with Brazil's real and the Mexican peso shedding 0.6% and 0.2%, respectively, as the dollar held near one-month highs. [FSX/} Trump's lunchtime speech on trade policy at the Economic Club of New York will be closely watched by investors for signs of progress in the U.S.-China trade deal after mixed reports last week. On Thursday, all eyes will be on a Mexican central bank meeting, where it is widely expected to cut its benchmark lending rate for the third time this year as the economy shows signs of stagnating, a Reuters poll showed. Sao Paulo-listed shares fell nearly 1% as investors shrugged of data showing Brazil's services sector activity rising at its fastest pace in September. In corporate news, shares of Brazilian fuel distribution company Petrobras Distribuidora SA fell 4.4% and were set for their worst day since March after reporting a fall in third-quarter revenue. Planemaker Embraer dropped 3% to a one-month low as it reported a quarterly loss and signalled it may issue a smaller dividend to shareholders. Key Latin American stock indexes and currencies at 1435 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1056.03 0.3 MSCI LatAm 2693.03 -1.74 Brazil Bovespa 107319.09 -0.97 Mexico IPC - - Chile IPSA 4441.52 -3.85 Argentina MerVal 34069.84 1.214 Colombia IGBC 13321.29 0 Currencies Latest Daily % change Brazil real 4.1753 -0.80 Mexico peso 19.1550 -0.25 Chile peso 791.2 -4.64 Colombia peso 3373.5 -1.17 Peru sol 3.3688 -0.23 Argentina peso 59.7500 -0.08 (interbank) (Reporting by Sagarika Jaisinghani and Susan Mathew in Bengaluru Editing by Alistair Bell)

EMERGING MARKETS-EM stocks rebound ahead of Trump's trade speech

12 Nov 2019

* Trump scheduled to discuss U.S. trade policy later on Tuesday

EMERGING MARKETS-Chile's peso leads Latam FX lower; stocks retreat

11 Nov 2019

By Susan Mathew Nov 11 Chile's peso slumped on Monday and currencies in Brazil and Mexico were mixed as a clutch of political crises and uncertainty over a U.S.-China trade deal dulled sentiment. Chile's peso weakened 1.4%, falling for the fourth straight session and leading declines among Latam currencies. The currency has lost around 5% over the last three weeks amid massive local protests, which among other demands, have called for a revision to the Chilean constitution. The government yielded to that demand on Sunday. In Bolivia, President Evo Morales stepped down after weeks of protests over a disputed Oct. 20 election, as a report from the Organization of American States revealed serious irregularities in the ballot. For market participants, the unrest presents some buying opportunity as those assets get cheaper, said Ed Al-Hussainy, a senior currency analyst at Columbia Threadneedle. "There is going to be a catch-up in these markets as the political uncertainties settle down in the next couple of quarters," Al-Hussainy said. Brazil's real traded 0.3% higher against a slightly weaker dollar, while Mexico's peso, a weather vane for trade sentiment, was near flat. Data on Monday showed Mexican industrial output was largely unchanged in September compared with August, but down 1.8% year-over-year. Broader market sentiment was dented by less-than-encouraging comments from U.S. President Donald Trump regarding a trade deal with China, as well as an escalation in political unrest in Hong Kong. Stocks in the region mostly fell, with Brazil shares cutting some early losses to trade flat. Iron ore miner Vale and stakeholder Bradespar weighed on the index after Vale narrowed its 2019 guidance for sales of iron ore and pellets. Chilean stocks fell more than 1%, while those in Argentina moved higher. Colombian markets were closed for a local holiday. Key Latin American stock indexes and currencies at 1451 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1050.77 -1.32 MSCI LatAm 2726.94 -0.48 Brazil Bovespa 107581.17 -0.04 Mexico IPC 43583.32 -0.27 Chile IPSA 4634.00 -1.21 Argentina MerVal 34384.46 0.742 Colombia IGBC 13321.29 -1.13 Currencies Latest Daily % change Brazil real 4.1502 0.42 Mexico peso 19.0989 -0.01 Chile peso 754.5 -1.06 Colombia peso 3336 0.00 Peru sol 3.3608 -0.05 Argentina peso 59.5000 0.01 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Dan Grebler)

EMERGING MARKETS-EM shares retreat as Hong Kong unrest hits sentiment

11 Nov 2019

Nov 11 An escalation of political unrest in Hong Kong drove its shares to their biggest one-day fall in three months on Monday, while uncertainty over the U.S.-China trade deal also clouded sentiment in emerging markets.

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