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U.S. dollar jumps 1% on safe-haven buying
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Oil, copper prices drop as bank fears mount
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Colombia's industrial production up 0.2% Jan
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Peruvian economy contracts in January
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Latam FX down 1%, stocks off 2%
(Updates prices; adds comments, details)
By Shreyashi Sanyal and Ankika Biswas
March 15 (Reuters) -
Latin American stocks and currencies tumbled on Wednesday as worries over the stability of Swiss lender Credit Suisse and fears of financial contagion drove investors to the safe-haven dollar. The broader Latin American currencies index dropped 1% and touched its lowest in over one month, while the MSCI Latam stocks gauge lost 1.9%, falling to an over two-month low. The dollar jumped 1% on renewed investor concerns that a full-blown global banking crisis may be brewing. Embattled Credit Suisse slid to a record low after its largest shareholder said it could not provide any more support, renewing investor concerns about stresses within the sector following the collapse of U.S. lenders. "Credit Suisse has a much larger balance sheet than SVB and is much more globally inter-connected, with multiple subsidiaries outside Switzerland including in the U.S... Credit Suisse is not just a Swiss problem but a global one," said Andrew Kenningham, an economist at Capital Economics.
Mexico's peso , Peru's sol and Brazil's real lost between 0.3% and 2%. The Credit Suisse fallout weighed on Mexican bank shares, with Banorte , Banregio and Banco Del Bajio down between 3.5% and 5.1%. However, the President of the Mexican banking association (ABM) said the nation's banking system is robust and strong and has not been affected by the SVB collapse. On the other hand, Brazil's Bovespa stock index , which houses most of Latin America's biggest banks, was flat after a sharp drop earlier in the day, with Itau Unibanco Holding SA , Banco do Brasil SA , Bradesco SA and BTG Pactual SA paring most of their losses. "Banks in markets (especially emerging ones) where interest rates have risen substantially are more at risk of investment portfolio valuation erosion," said Rahul Shah, head of corporate and thematic research at Tellimer Research. Shah sees Chilean and Brazilian banks' capital most exposed to any downward revaluation of their investment portfolios. The currency of Chile , the world's top copper producer, slid 2.2%, tracking a sharp decline in prices of the red metal. Those declines put the Chilean peso on track for its worst single-day showing in four months. Colombia's peso lost nearly 3%, on track for its steepest single-day drop in a month. The country's industrial production growth slowed to 0.2% year-on-year in January, reflecting the slowdown in economic activity. Oil also kept Latam currencies under pressure, as crude prices dropped to their lowest level in over a year as unease over Credit Suisse spooked offset hopes of a Chinese oil demand recovery.
Peru's economic activity contracted in January, after 22 months of uninterrupted growth, affected by social protests after the dismissal of the President Pedro Castillo in December. Separately, tech startups in Latin America are struggling to find banking alternatives after the crash of Silicon Valley Bank (SVB), one of the few banks that offered much-needed dollar accounts and catered to the specific needs of the sector. Key Latin American stock indexes and currencies at 1920 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 945.64 0.06 MSCI LatAm 2085.54 -1.85
Brazil Bovespa 102890.80 -0.04
Mexico IPC 52268.24 -0.8
Chile IPSA 5197.85 -1.9 Argentina MerVal 209624.21 -4.909
Colombia COLCAP 1114.93 -3.57 Currencies Latest Daily %
change
Brazil real 5.2973 -0.77
Mexico peso 18.9668 -1.99
Chile peso 820.5 -2.16
Colombia peso 4880.1 -2.92
Peru sol 3.7985 -0.31
Argentina peso (interbank) 202.5600 -0.23 Argentina peso (parallel) 375 0.53 (Reporting by Shreyashi Sanyal and Ankika Biswas in Bengaluru;
Editing by Angus MacSwan and Lisa Shumaker)
