EMERGING MARKETS-Latin American stocks, currencies slip with Brazilian elections, IMF meetings in focus 

By Reuters News

By Johann M Cherian

- Most currencies and stocks in Latin America slipped on Tuesday, with the Brazilian real among the top decliners, as investors weighed the potential outcome of the country's pivotal presidential election runoff and monitored the International Monetary Fund's annual meetings in Bangkok.

MSCI's index tracking regional equities .MILA00000PUS slipped 0.8%, while a parallel currencies gauge .MILA00000CUS dipped 0.4% versus the dollar.

Brazil's real weakened 0.6% to 5.01 per dollar, while the Bovespa index .BVSP lost 0.7%.

Investors focused on a BTG Pactual/Nexus poll that showed right-wing candidate Flavio Bolsonaro leading leftist President Luiz Inacio Lula da Silva in a simulation of their October 25 presidential runoff. With a margin of error of 2 percentage points, the poll shows Bolsonaro does not command an outright lead.

"There is a lot of uncertainty right now in terms of who's going to win," said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics.

"Prediction markets are favoring Bolsonaro. But with the relatively good momentum that Lula has gathered in recent days, that has increased the real's sensitivity to any kind of election news. It's a very tight race and anything can happen."

A BofA fund manager survey showed bullishness on Brazilian stocks picked up after Bolsonaro's strong showing in the first round of the presidential election, with 85% of those surveyed seeing the Bovespa above 200,000 by the end of this year, up from 46% last month. More than half said they would add to equities at current levels ahead of the runoff.

Outside election pricing, the enthusiasm was more contained as the IMF trimmed its growth forecasts for Latin America and the Caribbean for this year and 2027 and said most of the region was getting little lift from the artificial intelligence boom that has helped other economies absorb the energy shock from the war in the Middle East.

It projected regional growth of 2.3% this year, down from its July forecast of 2.4% and below the 2.5% registered in 2025. The IMF cut its 2027 forecast to 2.5% from 2.7%.

Fiscal concerns in most of the region's major economies, such as Brazil, Mexico and Colombia, have acted as a drag. Argentina and Venezuela are also recovering from years of debt distress.

In Colombia, officials pushed back against budget cuts proposed by allies of the new right-wing president, saying they would crimp investigations and trials of human rights abuses tied to the ongoing internal conflict.

Colombia's peso was choppy, last up 0.5%.

Energy producer Mexico's currency declined 0.5%, tracking lower crude prices after the US announced a diesel supply deal with Russia earlier this week. Uncertainty over Mexico's free trade deal with the US and Canada, along with the Mexican interest rate outlook, has also limited gains for assets in the region's second-largest economy.

Currencies of copper producers Chile and Peru weakened 0.6% and 0.2%, respectively.

Key Latin American stock indexes and currencies at 13:58 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1661.3

-2.11

MSCI LatAm .MILA00000PUS

3357.07

-0.8

Brazil Bovespa .BVSP

207654.24

-0.68

Mexico IPC .MXX

66992.1

0.37

Chile IPSA .MMXIPSAGC

11053.73

0.09

Argentina MerVal .MERV

2836242.29

0.29

Colombia COLCAP .COLCAP

2547.41

0.64

Currencies

Latest

Daily % change

Brazil real

5.0145

-0.56

Mexico peso

18.3339

-0.46

Chile peso

981.42

-0.65

Colombia peso

3177.65

0.53

Peru sol

3.4464

-0.22

Argentina peso (interbank)

1,519.0

-0.13

Argentina peso (parallel)

1,520.0

1.3

Capital.com is an execution-only brokerage platform and the content provided on the Capital.com website is intended for informational purposes only and should not be regarded as an offer to sell or a solicitation of an offer to buy the products or securities to which it applies. No representation or warranty is given as to the accuracy or completeness of the information provided.

The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.

To the extent permitted by law, in no event shall Capital.com (or any affiliate or employee) have any liability for any loss arising from the use of the information provided. Any person acting on the information does so entirely at their own risk.

Any information which could be construed as “investment research” has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.