EMERGING MARKETS-Latam stocks, FX outperform emerging market peers

By Bansari Mayur Kamdar

Jan 23 (Reuters)Latin American assets outperformed their emerging market peers on Monday, supported by firm commodity prices, while the leaders of Brazil and Argentina published an article stating their aim for greater economic integration, including a common South American currency.

MSCI’s index for Latin American currencies .MILA00000CUS was up 0.4% by 1454 GMT. Regional stocks .MILA00000PUS added 0.9%, with Argentina’s Merval index .MERV leading Latin American peers in early trading.

Latam stocks have outperformed the region’s currencies since the start of 2023 after lagging for three straight years.

“While there is some evidence of improvement in underlying fundamentals, be it the regionalization of trade benefiting Mexico or buoyant commodity markets benefiting Brazil, these markets remain dynamic and uncertain,” said Charles Sunnucks, emerging markets analyst at Oldfield Partners.

“However, what has changed is the dramatically different valuation landscape – not just the extent that valuations are lower, but also the noticeable dichotomy between some of the growth stocks versus the deeply overlooked value names.”

Brazil’s Bovespa index .BVSP erased all its early gains as losses in banking stocks offset the jump in energy and material stocks. The Brazilian real BRL= rose 0.2% against the dollar.

Brazil and Argentina aim for greater economic integration, including the development of a common currency, Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said in a joint article they penned.

“Markets are likely to be unimpressed by the news on a combined currency, not least because it will take years to implement, if it’s implemented at all,” said Kimberley Sperrfechter, emerging markets economist at Capital Economics.

Top copper producer Chile’s peso CLP= added 0.4%, tracking firm prices of the red metal on improving prospects for demand in top consumer China, low inventories and a weaker dollar.

Chile’s central bank is expected to keep the benchmark interest rate at 11.25% at its January meeting later this week, a Reuters poll of traders showed, before an easing cycle that would take rates to 6.5% within 12 months.

Peru’s sol PEN= slipped 0.2% against the dollar.

Deadly anti-government protests continued to spread nationwide, with Peruvian police arresting more than 200 people accused of illegally entering the campus of a major Lima university. Authorities in Cusco shut the Incan citadel of Machu Picchu and the Inca trail.

The Mexican peso MXN= and the Colombia’s peso COP= advanced 0.2% and 0.8% respectively against the greenback.

Key Latin American stock indexes and currencies at 1454 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1039.08

0.27

MSCI LatAm .MILA00000PUS

2293.13

0.86

Brazil Bovespa .BVSP

112019.06

-0.02

Mexico IPC .MXX

53968.39

0.04

Chile IPSA .SPIPSA

5277.14

0.79

Argentina MerVal .MERV

251897.82

1,703

Colombia COLCAP .COLCAP

1341.62

0.32

Currencies

Latest

Daily % change

Brazil real BRBY

5.1921

0.30

Mexican pesos MXN=D2

18.8368

0.10

Chile pesos CLP=CL

811.2

0.78

colombia pesos COP=

4564.63

0.56

Peru sol PEN=PE

3,865

-0.58

Argentina peso (interbank) ARS=RASL

184.3700

-0.50

Argentina peso (parallel) ARSB=

371

1.35

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Jan Harvey)

((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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