Asia Unhedged | Latin American politics threaten some of 2017’s best performing EMs
Supporters of Ecuadorean presidential candidate Lenin Moreno wait outside the national electoral council headquarters in Quito, Ecuador. Photo: Reuters, Mariana Bazo
Supporters of Ecuadorean presidential candidate Lenin Moreno wait outside the national electoral council headquarters in Quito, Ecuador. Photo: Reuters, Mariana Bazo
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Latin American politics threaten some of 2017’s best performing EMs

There is growing concern in the region amid protests and contentious elections

April 3, 2017 9:42 PM (UTC+8)

Felipe Pacheco writes for Bloomberg on pressure points mounting in Latin American markets in recent days.

  • Venezuelan 10-year sovereign bonds dropped to the lowest level in more than six months following the decision of the Constitutional Court to take over duties of the opposition-controlled National Assembly. However, this was followed by a positive sign when the decision was reversed over the weekend.
  • The oil price trajectory will ultimately decide the fate of Venezuelan bonds.
  • A rebound in Paraguay’s US dollar-denominated bonds is under threat following violent protests in response to a proposal that would allow President Horacio Cartes to run for reelection.
  • The results of the Ecuadorian election have been called into question following the election of leftist Lenin Moreno. The conservative opposition candidate has demanded a recount amid accusations of election fraud.
  • Ecuador’s dollar-denominated bonds still offer a higher yield than the similarly rated Nigerian notes.
  • Brazilian president Michel Temer continues to push forward with controversial austerity measures, despite a 73% disapproval rating. The real is now one of the five most volatile currencies, along with the Mexican and Colombian pesos, among the 31 major currencies tracked by Blooomberg.
  • For the first time in almost a year, leveraged funds are shorting the US dollar versus the Mexican peso. Investors have noted a shift in President Trump’s tone from the harsh rhetoric of the campaign trail.
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