Renewable Energy

EMERGING MARKETS-Latam markets weaker, Brazil plagued by pension reform worries

Credit: REUTERS/Nacho Doce

Brazil's currency and stocks fell on Wednesday as potential hurdles for pension reforms weighed, while other Latin American stocks tracked world equities lower. Currencies succumbed to a stronger dollar.

By Susan Mathew

April 24 (Reuters) - Brazil's currency and stocks fell on Wednesday as potential hurdles for pension reforms weighed, while other Latin American stocks tracked world equities lower. Currencies succumbed to a stronger dollar.

MSCI's index of Latin American shares .MILA00000PUS fell 0.9 percent, while its index of regional currencies .MILA00000CUS slipped 0.4 percent, both having touched their lowest since late March as stocks and currencies across Latam were well in the red.

Brazil's real BRL= slipped 1.8 percent and hit a four week low, while the Bovespa stock index .BVSP fell 0.9 percent on broad-based losses, giving up last session's gains.

A proposal to change Brazil's bloated pension system, seen as important to controlling the fiscal deficit, cleared a congressional hurdle late on Tuesday, following a lengthy debate that highlighted the government's struggle to build support for its signature reform policy.

The congressional vote clears the way for the bill to be considered by a special committee, and focus now turns to the hurdles it may face there.

"There is no reason to celebrate, this is only the first step," said Silvio Campos Neto, an economist at Tendências Consultoria. "The bill will next be passed on to the special commission, where the battle will be much harder."

Unexpectedly bad March jobs data and declining tax revenue figures also added to concerns about Brazil's sputtering economy, weighing on investor sentiment.

"The jobs data reinforces the importance of pension reforms as the government has to begin to generate incentives in the economy," Régis Chinchila, an analyst at Terra Investimentos said.

In Mexico, shares .MXX and the currency MXN= extended losses to a third straight session, with the peso hitting the lowest in two and half weeks as the dollar gained significantly. FRX/

A retreat in oil prices also hurt the crude exporter's currency. Colombia's peso COP=, also an oil exporter, slid to its lowest in 3-1/2 weeks. O/R

Data on Wednesday showed that Mexican consumer price inflation accelerated faster than expected in the first two weeks of April, restricting the central bank's scope to ease borrowing costs in the coming months from its highest level in over 10 years.

Chile .SPCLXIPSA and Colombian .IGBC also declined as equities dipped worldwide. MKTS/GLOB

Argentine shares .MERV and the currency ARS= dropped 3.8 percent as uncertainty over recession and rising inflation fed investor nervousness about the October presidential election.

Investors remained uncertain about whether President Mauricio Macri can overcome political fallout from his unpopular fiscal austerity drive to be re-elected in October.

Latin American stock indexes and currencies at 2100 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1084.52

-0.48

MSCI LatAm .MILA00000PUS

2734.45

-0.94

Brazil Bovespa .BVSP

95045.43

-0.92

Mexico IPC .MXX

45045.33

-0.23

Chile IPSA .SPCLXIPSA

5202.96

-0.27

Argentina MerVal .MERV

29746.60

-3.82

Colombia IGBC .IGBC

12982.77

-0.17

Currencies

Latest

Daily % change

Brazil real BRL=

3.9922

-1.8

Mexico peso MXN=D2

19.0678

-0.84

Chile peso CLP=CL

672.8

-0.76

Colombia peso COP=

3219.03

-1.28

Peru sol PEN=PE

3.323

-0.36

Argentina peso (interbank) ARS=RASL

43.9000

-3.35

(Reporting by Susan Mathew in Bengaluru, Stéfani Inouye and Laís Martins in Sao Paulo; editing by Grant McCool)

((susan.mathew@thomsonreuters.com; +91-80-6749-1130; Reuters Messaging: susan.mathew.thomsonreuters.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.

Other Topics

Brokers

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More