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EMERGING MARKETS-Latam equities muted as investors assess earnings; copper producers FX gain

Oct 25 (Reuters) - Most Latin American stocks were muted on Wednesday as investors assessed corporate earnings from Brazil and Mexico, while currencies of copper producers in the region climbed after top-consumer China stepped up fiscal stimulus.

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  • Santander Brasil’s Q3 net profit falls 12.5%
  • Mexico’s Alsea posts quarterly net profit surge
  • Brazil’s WEG slumps as Q3 shows fading revenue growth
  • Chile’s peso, Peru’s sol in bright spots
  • EM equities flat, FX down 0.1%

MSCI’s gauge for Latin American equities was little changed while a basket of regional currencies shed 0.1% against the dollar.

However, the currencies of top copper producers in the region rose, with Peru’s sol up by 0.3% and Chile’s peso up by 0.5% on hopes of a brightened demand outlook for the red metal.

Top consumer China’s parliament body approved a $137 billion in sovereign bond issuance to help rebuild areas hit by this year’s floods and improve urban infrastructure to cope with future disasters.

“Anything that’s pushing the global recovery narrative and the second-largest-economy China being healthy is going to be good overall as well for Latin America,” said Juan Perez, director of trading at Monex USA.

The Chilean peso and the Peruvian sol have thus far been among the worst performing currencies in the region, weighed down by China property sector woes and what that could mean for copper demand.

The Chilean peso has lost nearly 8% this year, while the Peruvian sol is down 1.6% during the same period.

On Wednesday, Brazil’s real inched 0.1% lower, while Mexico’s peso slipped 0.3% against the dollar as yields on longer-dated U.S. Treasury notes rose ahead of U.S. economic data that could set the tone for monetary policy in the world’s largest economy.

Meanwhile, Brazil’s Bovespa was down 0.2% by 1515 GMT.

Among single movers, WEG sank 8.1% after the manufacturer of electric motors and industrial paints reported revenue below analysts’ expectations in the third quarter, in a performance mainly affected by lower demand.

Santander Brasil the Brazilian unit of the Spanish lender reported a 12.5% decline in third-quarter net profit. Shares, however, inched up 1.1% in choppy trading.

Klabin climbed 0.7% even after the paper manufacturer posted a 88% drop in quarterly net profit, hurt by
a drop in prices of paper and cellulose and lower volumes sold.

Among other bourses in region, Mexico added 0.5%, with Alsea gaining 4.4% after the restaurant chain operator posted a 56% jump in quarterly net profit, boosted by strong sales in its Mexico stores and a drop in some commodity prices.

Volaris fell 1.8% after the Mexican low-cost airline reported weak third-quarter results late on Tuesday.

Elsewhere, Turkey’s benchmark stock index tumbled 7.0% and hit a two-month low, triggering a market-wide circuit breaker.


Reporting by Johann M Cherian in Bengaluru

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