Latin American assets dip as China virus fears diminish risk appetite

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* Brazil’s real eyes fourth straight weekly decline
* Latam “bellwether” for EM anxiety in Asia holiday- Analyst
* Argentine stocks set for worst week since early Nov

(Adds details, updates prices)
By Ambar Warrick
Jan 24 (Reuters) – Latin American assets retreated on Friday amid renewed concerns over the economic fallout from a Chinese coronavirus, especially after the United States confirmed a
second case.
While the World Health Organization has declared the flu-like virus outbreak as an “emergency in China” and not of
international concern, investors are worried over its effects on the world’s second-largest economy during a key holiday season.

Major Latin American currencies softened against the dollar, with an index of regional currencies shedding
about 0.4%.
Brazil’s real dropped about 0.5% to the dollar, and was set for a fourth straight weekly decline. Data showed that
Latin America’s largest economy saw its strongest annual rate of jobs growth since 2013.
“We are on Lunar holiday for the major Asian markets, so our bellwether for anxiety in EMs will be primarily in Latin
America, and to a lesser extent Eastern Europe,” said Eric Leve, chief investment officer at wealth manager Bailard.
However, he added that as seen with past viral outbreaks, “the market impacts tend to be very short-term and revert
quickly.”
The Mexican peso and the Colombian peso also retreated to the dollar, as the price of oil-a major export for
both countries- eyed its worst week since late-2018.
Colombia’s central bank is expected to leave its benchmark interest rate unchanged at its January meeting, a Reuters poll showed, amid expectations inflation will move closer to the long-term target this year as economic growth stabilizes at current levels.
The Chilean peso was slightly weaker against the dollar. The country’s central bank is also expected to hold its
benchmark rate in January, a poll showed, as it seeks to spur the ailing economy following months of unrest in the mining
nation.
Latin American stocks also dropped, with the regional equities index down more than 1% for the week.
The index, which was fairly stable at the start of trade, tracked losses in Wall Street after the United States confirmed a second case of the Chinese virus.
“The weakness this week for Latin America does broadly reflect the weakness in emerging markets as a whole, which have
been sold off lockstep with news on the coronavirus,” Bailard’s Leve said.
Brazil’s Bovespa index came off a record high to shed around 1%, while Mexican stocks eyed their worst
week since early-December.
Argentine stocks fell more than 2%, and eyed their worst week in more than two months.

Key Latin American stock indexes and currencies at 1931 GMT:

Stock indexes Latest Daily % change
MSCI Emerging Markets 1117.93 -0.38

MSCI LatAm 2891.22 -1.15

Brazil Bovespa 118314.32 -1.02

Mexico IPC 45193.93 -0.62

Chile IPSA 4640.72 -0.24

Argentina MerVal 40123.15 -2.472

Colombia COLCAP 1642.75 -0.33

Currencies Latest Daily % change
Brazil real 4.1854 -0.49

Mexico peso 18.8227 -0.35

Chile peso 777 -0.14

Colombia peso 3363 -0.12
Peru sol 3.323 -0.12

Argentina peso 60.0900 0.00
(interbank)

(Reporting by Ambar Warrick in Bengaluru; Editing by Cynthia
Osterman)

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