EMERGING MARKETS-Latam assets extend Nov. rally; Brazil's real steady after central banker's comments

BY Reuters | ECONOMIC | 12/01/23 11:14 AM EST

        *
      South Africa throws troubled Transnet $2.5 bln lifeline


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      Chile's economic activity index up 0.3% in October


        *
      Mexico ETF posts strongest monthly inflows since 2016


        *
      Brazil set to maintain current rate cut pace - central
bank
director


        *
      Latam stocks up 0.2%, FX up 0.5%



    By Johann M  Cherian
       Dec 1 (Reuters) - Most Latin American stocks and
currencies rose on Friday, extending November's rally, while
Brazil's real was steady following remarks by a local
policymaker on the outlook for monetary policy.
    MSCI's index tracking Latin American equities
 edged 0.2% higher, after notching its best month
since 2020 in November on hopes that U.S. interest rates have
peaked.
    A basket of regional currencies strengthened
by 0.5% by 1507 GMT.
    More broadly in emerging markets, Bank of America analysts
said that fixed income assets saw outflows of $59 million, in
its 18th straight week, while stocks saw outflows of $1.2
billion, its eighth straight week of losses.
    Meanwhile, the real reversed earlier losses and
inched up 0.1% after Brazilian central bank director Diogo
Guillen said the regulator has emphasized that its current pace
of 50-basis-point rate cuts per meeting will remain in place for
the next few meetings.
     Separately, data showed industrial production rose by a
less-than-expected 0.1% in October, pointing to a sluggish start
to the fourth quarter with the sector continuing to show "lack
of dynamism."
    "Today's numbers serve as a reminder that risks are still
biased to the downside and that the COPOM (central bank) will
have to accelerate the pace of monetary easing, assuming fiscal
and external conditions remain benign," said Andres Abadia,
chief Latin America economist at Pantheon Macroeconomics.
    Brazil's Bovespa shed 0.4%, weighed by a 0.5%
decline in state-owned oil giant Petrobras.
    The company's chief executive said the country is expected
to join the OPEC+ group of oil-producing countries in January
but would not take part in the group's coordinated output caps.
    Mexico's benchmark index shed 0.5%.
    Still, a sharp rally in Mexican shares and optimism around
companies moving to the Latin American country to be closer to
the U.S. have spurred buying into exchange-traded funds (ETF)
focused on local stocks, with iShares MSCI Mexico ETF posting
its strongest month of inflows in seven years.
    Argentina's Merval index gained 2.5%.
President-elect Javier Milei said he will appoint Patricia
Bullrich, who ran against him in this year's presidential
election, as his security minister.
    Chile's peso strengthened 1.0% after the IMACEC
economic activity index, a close proxy of gross domestic
product, rose 0.3% in October from a flat reading in the
previous month.
    Elsewhere, South Africa's rand appreciated 1.1%.
State-owned rail and ports firm Transnet saw its international
dollar bond prices rise, after the embattled firm got a 47
billion rand ($2.5 billion) government bailout.

    Key Latin American stock indexes and currencies at 1510 GMT:

   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets       981.24    -0.59

 MSCI LatAm                 2479.96     0.35

 Brazil Bovespa           126886.58    -0.35

 Mexico IPC                53877.50    -0.34

 Chile IPSA                 5814.72    -0.07

 Argentina MerVal         832554.89    2.356

 Colombia COLCAP            1148.33     0.13


      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.9033     0.23

 Mexico peso                17.2025     1.02

 Chile peso                     861     1.21

 Colombia peso              3975.64     0.80

 Peru sol                    3.7335    -0.21

 Argentina peso            361.0000    -0.14
 (interbank)

 Argentina peso                 920    -1.63
 (parallel)


 (Reporting by Johann M Cherian in Bengaluru; editing by
Jonathan Oatis)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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