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Brazil’s Bovespa leads losses in Latam stocks; FX steady

Latin American shares fell on Wednesday led by Brazil stocks as the government’s ability to build political consensus on the pension reform remained uncertain, while currencies of net crude exporters in the region rose on the back of higher oil prices. MSCI’s index of Latin American stocks fell marginally with most indices in the red, barring Mexico stocks which edged 0.2 percent higher. Sao Paulo-traded stocks dropped 0.4 percent, as losses in financials, typically sensitive to news related to the pension reform, weighed the most on Bovespa. Treasury Secretary Mansueto Almeida said that success of the pension reform will depend on the government’s ability to build political consensus and Brazil will need to further slash public spending to deliver a high level of savings. The pension reform is seen as the most important economic reform for Brazil and its mounting fiscal deficit, but investors worry that dilution of the original plan may not result in the savings promised by President Jair Bolsonaro. The central bank chief, Campos Neto, underlined similar concerns, saying fiscal challenges were focused around three areas - pension reform, public sector salaries and interest of debt amid a challenging international environment.

Mexican stocks flitted between positive and negative while the peso rose for a fifth-straight session on the back of higher oil prices. Chile’s peso rose marginally. The country’s central bank will hold off on hiking its benchmark interest rate until December amid subdued forecasts for growth in the world’s top copper producer, a monthly poll of 57 analysts published by the bank showed. Argentina’s peso eased off record-low levels hit earlier this week but market participants were increasingly concerned about the currency. Analysts believe renewed market volatility could spark another currency crisis for Latin America’s third-largest economy.

Key Latin American stock indexes and currencies at 1505 GMT

Stock indexes daily %Latest changeMSCI Emerging Markets 1095.45 0.18MSCI LatAm 2838.20 -0.07Brazil Bovespa 95839.52 -0.47Mexico IPC 45011.46 -0.31Chile IPSA 5275.46 -0.12Argentina MerVal 32252.70 1.6Colombia IGBC 13263.95 0.15Currencies daily %

change Latest

Brazil real 3.8279 0.67Mexico peso 18.8375 0.49Chile peso 662.5 0.20Colombia peso 3093.96 0.24Peru sol 3.293 0.03Argentina peso 43.1000 0.72

(interbank)