EMERGING MARKETS-Chilean markets hammered after leftist Boric’s election win

* Chilean peso slides to 2020 lows * Omicron fears sap global mood * Mexican peso supported by central bank’s hawkish move By Sruthi Shankar Dec 20 (Reuters) – The Chilean peso dived to 2020 lows and stock markets slumped on Monday after leftist Gabriel Boric’s presidential runoff election victory, raising concerns about the outlook for the South American country’s market-oriented economic model. The peso, among the weakest performing emerging market currencies this year, fell more than 3% to 875.40 per dollar – a level not seen since the height of the coronavirus pandemic selloff in 2020 – before easing to 858.9. The currency of the world’s top copper producer has shed roughly 17% versus the dollar this year, while the MSCI’s index of Latin American currencies is down just 4.5%. The overall mood across emerging markets was somber as investors feared that the fast-spreading Omicron variant of the coronavirus and hawkish central policies will hamper global economic growth, sending Latin American stocks down 2.5%. Chile’s equity benchmark S&P IPSA CLP index slumped nearly 6%, on track for its worst day in seven months, while lithium miner SQM, which has been in the crosshairs over its environmental impact, fell more than 5%. Boric, a 35-year-old former student protest leader who has pledged to raise taxes, scrap private pensions and oppose mines that “destroy” the environment, defeated conservative Jose Antonio Kast in Sunday’s runoff by a margin of about 56% to 44%. “We doubt Chile will go the way of Venezuela (or even Argentina) in terms of its economic model. We would view this spike as a medium-term selling opportunity with a target for USDCLP to revert back down to somewhere in the low 800s a year from now,” said Greg Anderson, global head of FX strategy at BMO. The Colombian peso and Brazil’s real also came under pressure, with oil prices slumping nearly 4% as soaring cases of the Omicron variant drove the Netherlands into a lockdown and other countries to assess similar moves. However, the Mexican peso remained supported near 20.7 per dollar after the country’s central bank last week surprised investors with a 50-basis-point interest rate hike aimed at reining in surging inflation. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1190.92 -2.1 MSCI LatAm 2075.28 -2.5 Brazil Bovespa 104874.54 -2.2 Mexico IPC 51686.54 -1.32 Chile IPSA 4108.69 -5.72 Argentina MerVal 81647.81 -1.906 Colombia COLCAP 1375.58 -1.39 Currencies Latest Daily % change Brazil real 5.7005 -0.29 Mexico peso 20.7460 0.42 Chile peso 858.9 -2.36 Colombia peso 3998.6 -0.69 Peru sol 4.041 -0.38 Argentina peso (interbank) 102.1300 -0.16 (Reporting by Sruthi Shankar in Bengaluru Editing by Paul Simao)

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