Brazil's real outperforms Latam peers
- Brazil's real up 0.1% against stronger dollar
- Colombian stocks jump 1.4% as Ecopetrol rallies
Central bank intervention saw Brazil's real outperform most Latin American currencies on Monday, while a near 4% jump for oil major Ecopetrol put the Colombian equity benchmark on course for its best session in nearly six weeks.
Most regional currencies weakened as the dollar perked up on rising Treasury yields and after upbeat US durable goods data.
Brazil's real ticked 0.1% higher. The central bank late on Friday said it would hold additional twice weekly auctions of traditional currency swaps, starting Sept. 27, to address demand from banks dismantling their "over-hedge" position to protect against exchange rate fluctuations.
But, the currency is down almost 3% so far this year, as political uncertainty outweighed headwinds from an aggressively hawkish central bank. Worries about policy moves by President Jair Bolsonaro leading up to elections next year have increased as his popularity plummets.
"When we look at the broader institutions in Brazil, the room for Bolsonaro to make significant trouble is limited but it will be very noisy over the next few months. That will probably turn some investors away, but create valuation opportunities," said Derrick Irwin, portfolio manager at Wells Fargo's Berkeley Street Emerging Markets Equity team.
Stocks in Sao Paulo rose 0.5% with oil stocks in the lead as crude prices rose amid supply concerns. Oil giant Petrobras rallied around 2%. The Bovespa index is down about 4.6% this year compared with a 2% slide in the broader EM shares index
"Threading the needle in Brazil is going to be challenging but there are some really good companies," Irwin said, adding that in Latam, they are overweight on Mexican equities.
Brazil's real slides ahead of central bank meeting
Mexico's IPC index, up 0.8% on Monday, has gained about 17% in 2021.
Cement maker Cemex rose 2.6% after rating agency S&P revised its outlook to positive from negative.
Colombia's COLCAP index jumped 1.4% to a two-week high as Ecopetrol looked to log its biggest gain in five weeks.
Ecopetrol's crude oil exports to Asia is seen rising, the company's chief executive said on Monday. Some 63% of the oil firm's crude exports have been shipped to Asia in 2021, compared with 52% last year.
The moves in Latam equities were in line with most other EM shares on Monday which climbed as hopes rose that Beijing would step in to limit the fallout from debt-laden Chinese developer Evergrande.
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