Latam assets slip on 2023’s last trading day, but set for best annual gains in years

EMERGING MARKETS-Latam assets slip on 2023’s last trading day, but set for best annual gains in years

Updated at 2:30pm ET/1930 GMT

By Siddarth S and Lisa Pauline Mattackal

Dec 29 (Reuters) –Latin American stocks and currencies were slightly down on Friday but indexes tracking both were poised for their strongest annual gains in years as investors head into 2024 with a relatively higher risk appetite on bets of reduced U.S. borrowing costs.

The MSCI index tracking Latin American stocks .MILA00000PUS edged down 0.5%. The equity index is set for an annual gain of 25%, its best year since 2016.

A basket of regional currencies .MILA00000CUS slipped 0.3% against the dollar, although the index has gained 2.5% in December.

“Markets today are setting up for the new year in ways that should scare some back to the anticipation of the unknown presents ahead, rather than expecting the same trends as delivered this month,” Bob Savage, head of markets strategy and insights at BNY Mellon, said in a note.

The Latam currency index ends the year on a high note, however, on track for annual gains of about 23%, its best year since 2009 as the U.S. dollar =USD weakened.

Latin American assets are set for a strong end to the year after the U.S. Federal Reserve’s dovish stance was followed by positive economic data, which bolstered hopes of rate cuts as early as March.

Across emerging markets, the Colombian peso COP= is set to be the best-performing currency with annual gains of 20%, while the Mexican peso MXN=D3 is on track for a yearly gain of 13%, taking the title of the second-best performing currency, set for one of its best years on record.

Brazil’s real BRL= slipped 0.5%, Mexico’s peso fell 0.1% and Colombia’s peso was flat on Friday. The Chilean peso CLP= climbed 0.3% for the day.

Among stocks, Brazil’s Bovespa index .BVSP, the Peruvian Lima Index .SPBLPGPT and Mexico’s IPC stocks index .MXX are set to post yearly gains of 22%, 21% and about 19% respectively.

Argentina’s Merval index .MERV rose 2.1%, while one of the most influential workers unions in Argentina has called for a national strike next month as opposition to the government’s overhaul of the economy builds.

On the data front, Brazil’s jobless rate fell to 7.5% in the three months through November, in line with market expectations.

For the day, among regional bourses, the Bovespa index was muted, Chilean stocks .SPIPSA fell 0.8% and Colombia’s Colcap index .COLCAP was up 0.6%.

Shares of Engie Brasil EGIE3.SA rose 0.2% after the firm said on Thursday it had reached a deal to sell a 15% stake in natural gas pipeline firm TAG to Canadian investment fund Caisse de Depot et Placement du Quebec (CDPQ) for 3.1 billion reais ($641 million).

Key Latin American stock indexes and currencies at 1930 GMT:

	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1022.62	-0.03
MSCI LatAm .MILA00000PUS	2659.51	-0.52
Brazil Bovespa .BVSP	134185.24	-0.01
Mexico IPC .MXX	57268.39	-0.34
Chile IPSA .SPIPSA	6197.77	-0.83
Argentina MerVal .MERV	925289.62	2.347
Colombia COLCAP .COLCAP	1195.20	0.59
Currencies	Latest	Daily % change
Brazil real BRBY	4.8564	-0.11
Mexico peso MXN=D2	16.9528	-0.14
Chile peso CLP=CL	881.4	0.36
Colombia peso COP=	3872.59	0.01
Peru sol PEN=PE	3.704	-0.70
Argentina peso (interbank) ARS=RASL	808.4500	-0.06
Argentina peso (parallel) ARSB=	1005	-0.50

Reporting by Siddarth S and Lisa Mattackal in Bengaluru; Editing by Sharon Singleton and Angus MacSwan