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EMERGING MARKETS-Latam FX set for annual losses; Chilean peso outperforms

Shashank Nayar and Ambar Warrick
·3 min read

* Brazil stocks hit record intraday high; overall debt falls * Chilean peso set to gain 5.5% in 2020 * Coronavirus cases surge across Latin America (Updates prices, adds analyst comment) By Shashank Nayar and Ambar Warrick Dec 30 (Reuters) - Most Latin American stocks and currencies rose on Wednesday in their last trading day of the year, but were set to register annual losses as a second wave of coronavirus cases offset a fledgling recovery in risk assets and economic trends. Colombia's peso led gains for the day, jumping 1.5% to the dollar thanks to recent strength in oil markets. But the currency, like most of its regional peers, was set to end the year lower. Brazil's real fell 0.1% to the dollar, but is by far the worst performing emerging market currency this year due to the coronavirus pandemic, which raised serious concerns over the country's fiscal health. Chile's peso was set to be the sole annual gainer, thanks to a resurgence in the prices of copper- the country's largest export. Recovering industrial demand in China was one of the biggest contributors to the spike in copper prices. The MSCI's index of regional currencies was set to shed 15% for the year. Brazilian stocks hit a record intraday high, and were set to end the year a shade higher. The MSCI's index of Latin American stocks was set for an annual loss of more than 15%. Brazil posted a $3.5 billion public sector budget deficit in November as the government maintained spending to tackle the pandemic. Brazilian President Jair Bolsonaro also called for a return to normality, saying that Brazil had reached its debt limit while dealing with the impact of COVID-19. The currency of oil-exporting nation Mexico was flat, as a surge in coronavirus-related deaths and fresh lockdowns offset gains in crude prices. More than a quarter of Latin America's deaths have been in Mexico, which, like Brazil, has struggled with a new wave of infections. The rapid spread of the virus in the region has set most Latin American stocks and currencies to severely lag their emerging market peers for the year, and investors sought better prospects in Europe and Asia. Argentine stocks were set to outperform their regional peers for the day with a 24% gain. Broader risk appetite for the day was boosted after the United Kingdom approved the coronavirus vaccine developed by the University of Oxford and AstraZeneca, which has an agreement with the Brazilian government to supply doses. "Risk sentiment remains buoyant, with vaccine roll-out hopes providing confidence despite growing COVID-19 case numbers," said Stephen Innes, chief global market strategist at Axi. Chile could also greenlight the AstraZeneca vaccine in the near-term. Markets in Brazil, Chile, Colombia and Argentina will be closed for New Year's Eve on Thursday. Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1288.06 1.68 MSCI LatAm 2462.42 -0.21 Brazil Bovespa 119446.42 0.03 Mexico IPC 44613.79 -0.18 Chile IPSA 4177.44 -0.49 Argentina MerVal 51596.49 0.538 Colombia COLCAP 1448.71 -0.14 Currencies Latest Daily % change Brazil real 5.1881 -0.13 Mexico peso 19.8830 0.04 Chile peso 710.7 0.61 Colombia peso 3417.75 1.59 Peru sol 3.619 -0.03 Argentina peso 84.1400 -0.13 (interbank) (Reporting by Shashank Nayar in Bengaluru; Editing by Jan Harvey and Grant McCool)