Sunday, 29 Nov 2020

EMERGING MARKETS-Latam risk assets propped up by vaccine, economic recovery hopes

    By Ambar Warrick
    July 1 (Reuters) - Brazil's real shot higher on Wednesday,
with broader Latin American currencies in tow after data showed
manufacturing in the region's largest economy returned to growth
in June, while hopes for a potential coronavirus vaccine also
helped.
    The real added about 1.7%, starting the second half
of the year on a positive note after underperforming most
regional currencies in the second quarter of 2020.
    Brazilian manufacturing expanded in June for the first time
in four months, a survey of purchasing managers' activity
showed, coming back to life after three months in a state of
near paralysis due to the coronavirus pandemic.
    The reading, coupled with a COVID-19 vaccine developed by
German biotech firm BioNTech and U.S. pharmaceutical
giant Pfizer showing some potential in early-stage human
trials, helped brew some optimism over an economic recovery,
even as new infections in the region continued to grow rapidly. 
    News of the vaccine also spurred gains on Wall Street, which
in turn helped Latin American stocks.
    Brazilian stocks added 1.7%, while the Chilean
equity index rose about 0.9%. Both bourses had marked
strong gains in the second quarter as they came off drastic
losses due to the pandemic.
    Argentine stocks outperformed their emerging market
peers with a nearly 59% jump during the second quarter.
    
    Despite the strong gains, some economic readings continued
to paint a dire picture for Latin American economies. Chile's
economic activity hit another historic low in May as measures to
contain the spread of the coronavirus left many out of work and
businesses shuttered.
    The country's jobless rate also surged between March and
May, following a similar trend in Latin America as the virus
constrained economic activity.
    "The May report showed the deepest deterioration in labor
market conditions so far, not only given the sharp rise in the
unemployment rate but also the significant decline in employment
numbers, with private sector jobs declining at a record
double-digit rate," Goldman Sachs analysts wrote in a note.
    "We expect labor conditions to deteriorate further in the
coming months given the recent extension of quarantine
measures."
    Colombia's peso strengthened despite an interest rate
cut by the central bank. The bank also announced further
liquidity measures to bolster the economy.

    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest    Daily % change
 MSCI Emerging Markets         1002.27             0.72
                                        
 MSCI LatAm                    1929.29             3.36
                                        
 Brazil Bovespa               96696.43             1.73
                                        
 Mexico IPC                   37766.19             0.13
                                        
 Chile IPSA                    3993.98             0.88
                                        
 Argentina MerVal                    -                -
                                        
 Colombia COLCAP               1121.49             0.87
                                        
                                                       
       Currencies             Latest    Daily % change
 Brazil real                    5.3474             1.71
                                        
 Mexico peso                   22.7073             1.24
                                        
 Chile peso                      817.9             0.55
                                        
 Colombia peso                 3720.58             0.75
 Peru sol                       3.5348             0.17
                                        
 Argentina peso                70.5100            -0.07
 (interbank)                            
                                        
 
     

    
 (Reporting by Ambar Warrick in Bengaluru; Editing by Dan
Grebler)
  

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