Renewable Energy

EMERGING MARKETS-Brazil's real, stocks rise with focus on pension reform proposal

Credit: REUTERS/PILAR OLIVARES

The Brazilian real firmed and stocks gained on Thursday, as investors assessed a report on the government's proposal to overhaul the country's pension system.

June 13 (Reuters) - The Brazilian real firmed and stocks gained on Thursday, as investors assessed a report on the government's proposal to overhaul the country's pension system.

The real BRL= climbed as much as 0.9% to outperform its Latin American peers, while Sao Paulo stocks .BVSP jumped nearly one percent after Brazil's congressional pension reform bill coordinator Samuel Moreira said the proposed changes would result in savings of around 915 billion reais ($238.21 billion).

The committee had targeted savings of between 800 billion and 1 trillion reais over the next decade through a range of measures, including raising the minimum retirement age and increasing workers' contributions. The bill will now be debated, voted on and sent to the lower house plenary for a vote.

The real eased slightly to trade up 0.7% and stocks pared some gains as details from the report emerged.

"All indications suggest that pension reform remains on track and may leave the committee with greater savings than the consensus expected," Dirk Willer, head of emerging market strategy at Citi Research, and Kenneth Lam, an emerging markets FX strategist, wrote in a note.

The social security overhaul is a cornerstone of President Jair Bolsonaro's economic agenda, aimed at shoring up dire public finances and restoring investor confidence to kickstart an economic recovery.

Other currencies in the region, including the Mexican MXN=, Colombian COP= and the Chilean pesos CLP= made tepid moves against the U.S. dollar as concerns about U.S.-China trade tensions and U.S. monetary policy remained a focus.

However, a jump in oil prices by as much as 4% helped shares in Brazil's state-run oil company Petróleo Brasileiro SA PETR3.SA gain 1.8% and boost the Bovespa index.

Brazilian food processor BRF SA BRFS3.SA was the biggest gainer on the index, rising 5% after J.P. Morgan upgraded the company to "overweight."

Oil gave back some of its losses from Wednesday after a suspected attack on two tankers in the Gulf of Oman near Iran and the Strait of Hormuz, through which a fifth of global oil consumption passes. O/R

Colombia's local stocks .IGBC tacked on 0.6%, with energy firm Ecopetrol SA ECO.CN riding on the back higher oil prices LCOc1. O/R

Company news drove shares in Brazilian petrochemical producer Braskem BRKM5.SA, which jumped 3.3% after it said an appeals court overturned a decision blocking dividend payments.

Key Latin American stock indexes and currencies at 1425 GMT

Stock indexes

Latest

daily % change

MSCI Emerging Markets .MSCIEF

1022.44

-0.37

MSCI LatAm .MILA00000PUS

2797.99

0.09

Brazil Bovespa .BVSP

98991.79

0.68

Mexico IPC .MXX

43744.92

-0.13

Chile IPSA .IPSA

5071.94

0.08

Argentina MerVal .MERV

39801.40

-2.76

Colombia IGBC .IGBC

12278.51

0.51

Currencies

Latest

daily % change

Brazil real BRBY

3.8410

0.70

Mexico peso MXN=D2

19.1749

-0.05

Chile peso CLP=CL

695.4

0.00

Colombia peso COP=

3262.1

0.11

Peru sol PEN=PE

3.328

0.03

Argentina peso (interbank) ARS=RASL

43.5600

0.32

($1 = 3.8412 reais)

(Reporting by Sruthi Shankar in Bengaluru; Editing by Bernadette Baum)

((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6749 6328; Reuters Messaging: sruthi.shankar.reuters.com@reuters.net))

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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