Fitch upgrades Argentina's foreign-currency rating back to 'CC'

April 7 (Reuters) – Ratings agency Fitch on Tuesday changed Argentina’s long-term foreign currency rating to ‘CC’, a day after downgrading to ‘Restricted Default’.

The agency attributed the rating upgrade to unilateral re-profiling via executive decree of locally issued foreign currency debt instruments, which Fitch deemed as execution and completion of a distressed debt exchange.

Fitch on Monday downgraded Argentina’s long-term foreign currency rating to ‘Restricted Default’ following postponement of upcoming payments on foreign currency debt by the country’s government. (Reporting by Taru Jain; Editing by Shinjini Ganguli)

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EMERGING MARKETS-Most Latam stocks, FX extend gains as slowing coronavirus cases brew optimism

    * Mexican peso up 2.4%, annual inflation eases in March
    * Fitch downgrades Argentina after payments freeze
    * Chile March exports fall; 7.6% drop in value of copper
shipments

 (Updates prices)
    By Susan Mathew and Ambar Warrick
    April 7 (Reuters) - Latin American assets extended their
recovery into a second session on Tuesday, as risk assets were
propped up by hopes that the coronavirus outbreak had peaked in
several hotspots. 
    Data showing that new infections were slowing across several
U.S. states, coupled with a lower rate of deaths in several
European countries, led many to believe that the virus would
plateau.
    "If the incipient recovery in risk appetite and commodity
prices continues and ... the global economy starts to recover in
the second half of the year, most EM currencies will probably
recover more of the ground they have lost this year," said Jonas
Goltermann, senior economist at Capital Economics. 
    Brazil's real added 1.3%, while the Colombian peso
 rose 1.9% against a weaker dollar. 
    Mexico's peso rose almost 2%, bouncing from last
session's record. On Tuesday, data showed Mexican consumer
prices eased in March closer to the central bank's 3% target
rate and below analyst expectations. 
    "(The inflation number) should ease near-term concerns at
the central bank about the impact of the weakness of the peso on
prices," wrote analysts at Capital Economics in a note. 
    "With the economy likely to enter a deep recession due to
the coronavirus and the government seemingly doing little to
help, interest rates are likely to be lowered sharply. We’ve
penciled in 200 basis points of cuts this year."
    Most regional stocks rallied, taking MSCI's index of Latam
stocks xx% higher. But, in line with the United
States, stocks pared some gains as caution prevailed over the
likelihood of a deep global recession.
    Argentine stocks slipped, however, looking to break
a five-session wining streak.
    Rating agency Fitch downgraded Argentina following
postponement of upcoming payments on foreign currency debt by
the government. A poll by Argentina's central bank showed
economists see the outlook darkening.
    Brazil's Bovespa surged around 3.5%. State-run oil
and gas behemoth Petroleo Brasileiro rallied after it
approved lower oil production in April than from the same month
a year ago.
    Colombian stocks added 0.5% in its fourth straight
session of gains, while Mexican shares rose 1.2%. 
    Still, the gains were a fraction of what was lost over a
month-long rout. 
    Chile's peso and stocks weakened. Data
showed imports plunged in March, while exports fell as the value
of copper shipments dropped 7.6%. Chile is the world's largest
copper producer.
    
    Latin American stock indexes and currencies 1930 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     879.08     2.96
                                   
 MSCI LatAm               1626.54     3.36
                                   
 Brazil Bovespa          76664.90      3.5
                                   
 Mexico IPC              34779.92     1.16
                                   
 Chile IPSA               3738.67    -0.26
                                   
 Argentina MerVal        26695.42   -0.844
                                   
 Colombia COLCAP          1165.36     0.45
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.2190     1.36
                                   
 Mexico peso              24.1641     1.91
                                   
 Chile peso                 854.1    -0.46
                                   
 Colombia peso            3907.17     1.85
                                   
 Peru sol                  3.3628     0.80
                                   
 Argentina peso           65.0675    -0.12
 (interbank)                       
                                   
 
 (Reporting by Ambar Warrick in Bengaluru; Editing by Sandra
Maler and Grant McCool)
  

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GRAPHIC-Bets on potential mining defaults surge on worsening sector outlook

* GRAPHIC: reut.rs/2XhBwYj

* GRAPHIC: reut.rs/2UNdsLu

By Zandi Shabalala

LONDON, April 7 (Reuters) – The cost of insuring against potential debt default by mining companies has risen to the highest in five years on mounting fears of recession, demand destruction and shutdowns to contain the spread of the coronavirus.

Commodity group Glencore’s five-year credit default swaps (CDS) – which traders use as a hedge against uncertainty – were up at 443 basis points on Tuesday from 190 bps at the end of February, data from information provider IHS Markit showed.

Those of Anglo American rose to 274 bps from 137 bps over the same period as the virus disrupts businesses and global supply chains, while demand slumps.

Both were above Markit’s main index of investment grade corporate CDS, which was at around 100 bps from 64.50 at the end of February.

Glencore’s relatively higher debt has driven the jump in its debt insurance costs, analysts said, while Anglo’s climbed on its exposure to South Africa and the struggling diamond sector.

Rio Tinto and BHP, whose CDS have risen more modestly, have a relatively conservative balance sheet and the mix of commodities they own made them less vulnerable, they said.

All four miners declined to comment.

Overall since the 2015-16 commodity market slump, miners have slashed debt, cut costs and shied away from mergers and acquisitions to strengthen financial positions.

But stalled growth and demand as well as tumbling commodity prices are threatening that progress for some in the industry.

“If we saw a further pullback in commodity prices then Glencore’s net debt to EBITDA would begin to work back towards that uncomfortable level we saw in 2015/16,” said BMO Capital Markets analyst Edward Sterck, referring to a major commodities slump.

He added that he did not have any concerns about the financial security of the miners but that the coronavirus had raised risk in the market. In 2015, Glencore’s net debt to EBITDA ratio was at 2.98 times and at the end of 2019 sat at 1.5 times.

At Anglo, a nationwide 21-day lockdown in South Africa, which accounts for 48% of its EBITDA, and a tough environment in the diamond market have reduced its attractiveness, BMO’s Sterck said. The miner issued a $1.5 billion bond in March.

Meanwhile, Goldman Sachs upgraded BHP to “buy” from “neutral” on Friday, citing a strong balance sheet that could enable them to buy back stock and assets.

The four miners have cut net debt from a combined $79 billion in 2015 to $39 billion at the end of 2019, and rising profits have seen them return record dividends and embark on share buybacks.

“The lesson the mining industry, and Glencore in particular, learned pretty clearly in 2015 was that the balance sheet has basically become sacred,” said Chris LaFemina, chief equities analyst at Jefferies.

Glencore in March deferred payment of its 2020 dividend in a move to cushion itself against what could be a worsening global economy. Its debt stood at $17.6 billion in 2019 from $26 billion in 2015.

Capital expenditure will come under scrutiny in the current climate but there have been few significant delays to major projects.

“We are in uncharted territory so if you are one of the majors you will immediately go into cash preservation mode for the foreseeable future,” a mining banker said.

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British Columbia Securities Commission warning about companies aggressively promoting COVID-19 cure

The British Columbia Securities Commission is warning the public to “exercise extreme caution” in dealing with companies aggressively promoting products or initiatives to detect, cure or treat COVID-19.

The securities commission singled out Revive Therapeutics Ltd., which is currently promoting a potential cure to the virus in North America and Europe.

The pharmaceutical company is based in Ontario and listed on the Canadian Securities Exchange.

“Germany’s Federal Financial Supervisory Authority has issued an investor alert about Revive, warning that buy recommendations are currently being made on a large scale in the form of market letters and e-mails,” a statement from the B.C. Securities Commission reads.

[ Sign up for our Health IQ newsletter for the latest coronavirus updates ]

“The promotions in Germany make aggressive claims about Revive’s potential success in treating COVID-19 and the prospects of investors receiving large profits.”

The commission is reminding investors to be cautious when considering aggressive promotions as a basis for investment decisions as these promotions may make false claims of large profits.

The warning can also be extended to the public consuming the information with their own health in mind.

Provincial health officer Dr. Bonnie Henry has said repeatedly there is no vaccine or any health product that has proven successful in treatment or protection against COVID-19.

According to its website, Revive Therapeutics Ltd. is a life sciences company that is exploring the use of the drug Bucillamine as a potential novel treatment for infectious diseases including influenza and COVID-19. The company has applied for a provisional patent with the U.S. Patent and Trademark Office entitled “Use of Bucillamine in the Treatment of Infectious Diseases.”

“Revive was founded on the premise of finding new uses for known drugs, and we are expanding on our rich product portfolio to target infectious diseases such as the coronavirus disease or COVID-19,” Revive’s CEO Michael Frank said in a statement.

“Revive has a history in the clinical development with Bucillamine in the treatment of acute gout flares and cystinuria, and we will advance our efforts in reviving and exploring new uses of Bucillamine for unmet medical needs.”

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Pandemic deals fatal blow to struggling businesses

The first corporate casualties of Covid-19 have emerged.

In just the first three months of this year, 239 companies went into liquidation, Accounting and Corporate Regulatory Authority (Acra) data showed. This is compared with 287 for the whole of last year – already a record high since 2005.

Liquidation or winding up of a company is a process where the company’s assets are seized and sold, with the proceeds used to pay off its debts and liabilities.

Another 19,000 businesses and companies ceased operations between January and last month, data from BizInsights.net, an authorised information service provider of Acra, showed.

Experts said those that shuttered in recent months would already have been in trouble before the coronavirus struck, but the pandemic dealt the fatal blow.

Going forward, they expect to see record numbers of company closures and bankruptcies.

With uncertainties amid the United States-China trade war last year and now the Covid-19 outbreak – which first reared its head on Jan 23 in Singapore – companies have been bludgeoned by a double whammy, said OCBC Bank chief economist Selena Ling.

“The impending shutdowns announced are necessary circuit breakers for the Covid-19 pandemic but may levy additional pain on firms in the short term, suffering from a demand shock and supply chain disruptions,” she added.

The Government has pledged $48 billion in a Resilience Budget to help companies.

Prime Minister Lee Hsien Loong said on March 29 that the economy is being crippled by Covid-19 – aviation and tourism are dead, gig economy work is evaporating and the rest of the economy is being disrupted by supply chain upheavals.

”This is the time for you to play your part for our country, friends and loved ones. You are the most important defence in this war.”

DR RAYMOND ONG, general practitioner at Intemedical 24 Hour Clinic.

The number of companies and businesses that ceased operations in the first three months of this year jumped 78 per cent to 18,923, from 10,611 in the same period last year.

The number of companies that went into liquidation doubled in the first three months of the year, from 119 companies during the same period last year.

The list includes retailers, food and beverage (F&B) firms, transport companies and consultancy firms.

Maybank Kim Eng senior economist Chua Hak Bin said it would not be surprising if the number of business failures quadruples in the coming quarters as businesses struggle to stay afloat.

This, in turn, will result in huge job losses, he noted. During the global financial crisis, most of the layoffs were in the financial sector. Singapore saw some 17,000 job losses in 2008 and 23,000 in 2009.

18,923

Number of companies and businesses that ceased operations in the first three months of this year, a 78 per cent jump from 10,611 in the same period last year.

239

Number of companies that went into liquidation in the first three months of this year, compared with 119 companies in the same period last year.

With a lot more people working in the F&B, retail and airline and hospitality industries, which are hardest hit by the virus outbreak, the absolute number of people who will lose their jobs this time will be much higher, added Dr Chua.

Restaurant Association of Singapore (RAS) president Vincent Tan told The Straits Times that one-third of the 12,000 restaurants in Singapore could close in the next three months if the situation remains the same or worsens.

A spokesman for RAS said industry players should look at methods such as digitalisation to improve business processes and get ready to ride the upturn in the economy.

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COLUMN-Wild variation in recession calls underlines volatility shock: Dolan

 (The author is editor-at-large for finance and markets at
Reuters News. Any views expressed here are his own.)
    By Mike Dolan
    LONDON, April 3 (Reuters) - Forecasting the depth and
duration of the coming world recession is like playing "pin the
tail on the donkey" and the sheer range of outcomes emerging
leaves markets flailing blindfold.
    Measuring how almost $90 trillion of annual global output
will be hit by the pandemic and the economic standstill called
to stop it is complicated by uncertainty over the disease's
trajectory and the impact of the biggest monetary and fiscal
rescue on record.
    The unprecedented shock is tough for markets that, while
priding themselves on being forward-looking, continually riff
off the recent past and have been blindsided twice in just over
a decade after years of apparently serene conditions.
    The "Great Moderation" of ebbing volatility in world output
that defined two decades before the last crash was only briefly
disturbed in 2008/09 and its resumption afterwards left many
assuming the Great Financial Crisis was something of a one-off.
    In just three weeks, the world's top financial economists
have raced out projections of what is set to be first
contraction in global output for 12 years, probably the deepest
since the 1930s -- and perhaps, due to the scale of government
support mobilised, the shortest-lived in recent history.  
    The blizzard of estimates underscores the sudden sharp
resurgence in both macro and market volatility.
    Updated calls from six global investment banks show
second-quarter U.S. GDP ranging from a relatively mild 9.5%
annualised contraction -- forecast by UBS -- to the plunge of as
much as 42% predicted by Nomura. 
 Q2 2020                                                        
 %q/q,     J.P.    Goldman    Nomura  Morgan    UBS    Deutsche
 saar      Morgan  Sachs              Stanley          Bank
 Global      -1.2  -            -6.2  -          -0.8  -
 China       57.4  -            52.4  -            38        6.6
 United       -14        -34   -41.7       -38   -9.5       -9.5
 States                                                
 Euro         -22      -38.4   -43.4     -32.9  -22.9      -11.4
 area                                                  
 Japan         -1       -7.2   -12.4  -         -18.2         -3
    For the year and world as a whole, projections swing from a
near-1% overall expansion of global GDP in 2020 to a 4% tumble
-- a difference in outcomes spanning more than $4 trillion.
    Asset managers are similarly divided. 
    BlackRock's Amer Bisat reckons the world economy could
contract by 11% in the first half of 2020, losing $6 trillion in
output. Legal & General Investment Management's chief investment
officer Sonja Laud said her team is working on the assumption
that global output fell by 20% in the year through April.
    The 20% drop in the MSCI world stock index so far this year
chimes with the latter but the array of calls on what will
happen supports equity volatility gauges still above 50%.
    
    JUST HOW RARE ARE GDP SHOCKS?
    Deutsche Bank strategist Jim Reid says data going back
centuries show major economies shrank 10% or more during the
Depression of the 1930s, times of war and pandemics such as the
14th century Black Death. Mostly, there were "no central banks
to step in and stabilise the situation".      
    Deutsche's forecast of a 6.5% contraction would make 2020
the third worst year for the British economy since 1900, after
1919 and 1921. Contractions of 12.9% in 1932 and 11.6% during
post-war demobilisation in 1946 mark the sharpest U.S. slumps,
with 2020 only the 18th worst of 230 years if Deutsche's
forecast of a 4.2% drop in GDP proves correct.
    But the swings of the past 40 years have been more subdued. 
    Many economists blame this "Great Moderation" for why so few
people saw the financial crisis of 12 years ago coming:
globalisation and evaporating inflation encouraged ever-cheaper
credit and what seemed to financial markets entirely rational
risk-taking and leverage that eventually exploded spectacularly.
    On the eve of the coronavirus pandemic, measures of rolling
five-year global GDP volatility compiled by JPMorgan hit their
lowest on record.
    For an interactive version of the chart below, click here reut.rs/3bMcJzK.
    JPM strategist Jan Loeys says one of the reasons has been
that governments have grown intolerant of any downturn
whatsoever and have met threats like the 2011/12 euro zone
crisis or 2014/15 oil price plunge with huge stimulus to calm
markets and support output and jobs.
    The multi-trillion monetary and fiscal response to this
year's shock may be appropriate public policy but shows the same
pattern and may well be successful in igniting a quick recovery,
 suppressing GDP volatility and borrowing rates once more.
    Where will it end? For Loeys, the gradual loss of policy
ammunition and accumulation of government debts now points
inexorably toward some form of helicopter money and direct
central bank funding of government deficits. 
    And this, he says, is "playing with fire" because the
absence of GDP volatility was in many ways just the flipside of
years of suppressed inflation. 
    If central banks end up migrating from quantitative easing
to direct funding of government spending, then long-dormant
inflation may finally reawaken -- and truly end an era.

    
 (By Mike Dolan; Table and charts by Ritvik Carvalho, with
JPMorgan data; Editing by Catherine Evans  Twitter:
@reutersMikeD)
  

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Coronavirus: Frightened workers stay away from factory floors, hitting output

PARIS (BLOOMBERG) – Philippe Petitcolin has had a hard time getting workers back on the factory floor.

The Safran chief executive officer’s efforts to resume work at sites building jet engines for Airbus hit a wall after the company handed over its entire stock of 60,000 masks to plug French hospital shortages, and it lacked thermometers to test staff for possible coronavirus infections. Employees in outbreak hot spots like eastern France were reluctant to return to assembly lines, especially without protective gear.

“Workers are scared,” Petitcolin said. “On the one hand people are told to remain in confinement, and on the other we are asking them to come to work. This isn’t easy.”

That scenario is playing out worldwide – from Safran and BMW to Ford Motor – as global infections cross 1 million, and companies and governments try to strike a fine balance between confinement and productivity. Workers remain wary as countries impose strict lockdowns, while at the same time urging some of them to return to work to avert a total collapse of the economy.

Already, mass factory shutdowns in Europe and Asia have cratered manufacturing, which posted one of the grimmest months on record in March, as the virus wreaked havoc on supply chains. Manufacturing activity measures dropped sharply, with some at their lowest since the financial crisis more than a decade ago.

With average output and new orders shrinking the most in 11 years in Germany, France and Italy, pressure is building to try and kick start the machine. On Wednesday, Chancellor Angela Merkel and German auto-industry officials grappled with how and when to restart the country’s sprawling factory network as concerns intensified that some cash-strapped suppliers may not survive the damage from the pandemic.

Debate over whether work sites should resume is also raging in the US, where Ford and Fiat Chrysler Automobiles have drawn heated language from the United Auto Workers union. On Tuesday, Ford canceled plans to reopen factories in Mexico and the US over the next two weeks, citing risks to workers.

Virus-related protests have hit Amazon.com, with employees at a New York warehouse walking off the job to demand more cleaning and protection as coronavirus cases have popped up in the company’s 800,000-strong workforce.

“Associates are afraid to come to work; associates are getting sick; it’s been scary, very scary,” Chris Smalls, the leader of the walkout Monday at the company’s Staten Island, New York, warehouse, said in a television interview. Smalls was fired after the protest, and unions have called for his reinstatement.

Restarting safely will challenge factory managers across the globe in coming weeks and months as economies try to shake off the coronavirus shutdown.

In Europe, companies like Safran, Fiat, Peugeot maker PSA Group, and Airbus are trying to put in place measures to secure work sites for staff, some of which could require significant changes to existing set ups.

“Strategies are needed that can link production resumption with further containment of the epidemic,” Clemens Fuest, president of Germany’s IFO Institute for Economic Research think tank said by email after BMW, Volkswagen and Daimler shut down production operations for several weeks.

BMW has talked about specific spacing between workers, while Airbus has put in place strict measures at plants that includes separate shifts, smaller teams and takeaway canteen food. The planemaker has restarted a plant in Toulouse, while Spanish operations are still on hold except for the production of 3D-printed hospital visors at some sites.

PSA has extended the halt of its European factories indefinitely until it works out a health protocol with unions and experts that will include the wearing of masks, hourly washing of work surfaces, keeping doors open so handles stay clean and three-hour intervals between hand-to-hand exchanges of parts.

“At the heart of car factories, we work shoulder-to-shoulder, face-to-face,” said Jean-Pierre Mercier, spokesman for the CGT union at PSA. “Vehicles aren’t essential, and workers would be better off observing the policy of maximum isolation at home.”

The World Health Organization has made a series of recommendations on how employers can secure work places during the virus outbreak, including frequent disinfecting and hand-washing stations for employees. At the top of the list is getting people to work remotely, something that isn’t possible for many factory operations.

A look at what’s happening in China may provide some idea of what’s to come for companies in Europe, where the outbreak still hasn’t peaked in many countries. As the lockdown is gradually lifted in Wuhan, where the virus originated, factories are restarting in other Chinese regions, although many under strict conditions with workers wearing masks and having their temperatures monitored.

For Safran’s CEO Petitcolin, meanwhile, getting everyone back on assembly lines may be some ways away. About 10 per cent of the company’s sites are currently completely shuttered, mostly in the US and India. After it procured some masks and hand sanitizer, about 15 per cent of workers have returned to its industrial sites in France.

“We don’t want to stop our production lines,” Petitcolin said. “If Airbus continues to work, then as engine makers, and if health rules allow, we want to meet demand.”

Have a question on the coronavirus outbreak? E-mail us at [email protected]

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China's services activity shrinks further in March, job cuts fastest on record

BEIJING (REUTERS) – China’s services sector struggled to get back on its feet in March after a brutal month of unprecedented shop closures and public lockdowns amid the coronavirus outbreak, a private survey showed on Friday (April 3).

Services companies cut jobs at the fastest pace on record as orders plunged for the second straight month and businesses scrambled to reduce their operating costs. Export orders also slumped again as more countries imposed their own tough virus containment measures.

While the Caixin/Markit services Purchasing Managers’ Index (PMI) rebounded to 43 in March from a record low of 26.5 in February, it still remained deep in contraction territory and was the second weakest reading since the survey began in late 2005. The 50-point mark separates growth from contraction on a monthly basis.

The findings add to fears that consumer-facing services firms could be hit much harder and longer by the downturn than factories, which are slowly getting back to work, albeit at below normal levels. Similar business surveys will be released for Europe and the United States later on Friday.

The services sector is an important generator of jobs in China and accounts for about 60 per cent of its economy, which now looks likely to shrink for the first time in 30 years. Many companies are smaller, privately owned firms with much less cash to see them through an extended slumps than larger, state-owned enterprises.

While some restaurants, malls, and movie theatres are slowly reopening as China eases restrictions, many remained closed or are operating at limited capacity as authorities sound the alarm about a possible second wave of infections and advise people to avoid gatherings.

Schools remain shut in most part of the country, and some cities and regions, including a county in China’s central province of Henan, have introduced strict quarantine measures in light of new infections.

“Services activity remained under huge pressure and continued to shrink markedly amid restrictions to contain the coronavirus epidemic,” Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, wrote in a note accompanying the Caixin PMI release.

“The recovery of economic activity remained limited in March, although the domestic epidemic was contained,” he said.

The slump in the private sector survey, which focuses more on small, export-oriented companies, also contrasted with an official survey this week, which showed an expansion in activity.

The rapid spread of the pandemic outside China has put more pressure on demand, CEBM Group’s Mr Zhong said, and wreaked havoc on global supply chains.

Services companies cut their selling prices for the fourth straight month in an effort to boost sales, even as they had to plough more money into safety equipment for staff, the private survey showed. Businesses remained deeply pessimistic and concerned over how long the crisis will last.

“There are signs of lasting damage to domestic demand, and on top of that the external shock resulting from widespread lockdowns in other major economies is arriving fast and furious,” analysts from Societe Generale said in a note on Thursday, noting Beijing’s stimulus policy response has been “incremental”.

The analysts said they expect “a decent dose of domestic policy stimulus” will kick in around the middle of the second quarter.

Officials have cut some taxes and fees, and told banks to extend cheap loans and debt payment relief to firms that have been hardest hit.

They have also signalled additional monetary and fiscal stimulus, including bank reserve ratio cuts and special treasury bill issuance, while some local governments are handing out vouchers worth billions of yuan to boost consumer spending.

Caixin’s composite manufacturing and services PMI, also released on Friday, picked up to 46.7 from a record low of 27.5 in February. Though the rise suggests that the sharp initial shock from the virus outbreak is easing, the reading remained below historical averages.

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EMERGING MARKETS-Latam FX weakens as dollar unfazed by jobs data; stocks edge up

    * Fitch downgrades Colombia's credit rating
    * BofA expects Mexican economy to shrink 8% in 2020
    * Dollar unfazed by unemployment data
    * Oil price spike helps Brazil's Petrobras

 (Adds analyst comment, updates prices)
    By Ambar Warrick and Susan Mathew
    April 2 (Reuters) - Latin American stocks made small gains
on Thursday in a volatile session, while most regional
currencies weakened as a swathe of weak economic readings
increased safe-haven demand for the dollar.
    After dismal manufacturing data from around the globe had
dented sentiment on Wednesday, a spike in weekly U.S.
unemployment claims further outlined the economic impact of the
coronavirus outbreak.
    With global infections now crossing the 1 million mark, a
return to business as usual in the near term seems unlikely,
with economic activity likely to contract further.
     Latam stocks rose about 1%, tracking some
gains on Wall Street, while currencies fell
0.4%, with oil-sensitive players such as Mexico's peso
and Colombia's peso failing to capitalize on a jump in
oil prices.
     In fact, the weak reading furthered the rush for the
dollar, which has been a sole beacon of stability amid a
valuation rout that has battered everything between equities and
treasury yields. 
    Even though jobless claims topped estimates by a wide
margin, some analysts say the market may have priced them in,
while others say it is beyond comprehension.
    Analysts were also of the opinion that the U.S. numbers only
heralded a further downturn in economic activity.
    "The data tsunami is coming, and this is only the beginning.
We look for the USD to gain traction in the weeks ahead," TD
Securities wrote in a note.
    Mexico's peso fell 0.5% after the finance ministry predicted
a 3.9% contraction for the economy this year, while Bank of
America forecast an 8% shrinkage due to fallout from the virus
outbreak.
    Mexican stocks fell slightly.
    Brazil's real retreated slightly, while stocks
 jumped 1.9% on gains in state-owned oil and gas behemoth
Petrobras. The stock surged in tandem with oil
prices, which spiked on hopes of an end to the Saudi-Russian
price war. 
    Brazil continued attempts to shield its economy from impacts
of the crisis with the Monetary Council authorizing the central
bank to lend directly to banks using credit portfolios as
collateral, while the government unveiled a $10 billion scheme
to protect jobs.
    Colombian shares rose 3% after four sessions of
losses, while the peso retreated.   
    Fitch on Wednesday downgraded Colombia's credit rating,
leaving it just a notch above junk, citing the likely economic
weakening spurred by the pandemic. 
    "Colombia still has one of the best outlooks for LATAM, but
the risk at getting downgraded to junk is growing and that could
scare away a lot of foreign investors," said Edward Moya, senior
market analyst at OANDA, New York.
    
    Key Latin American stock indexes and currencies at 2056 GMT:
    
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets          837.72               1.26
                                        
 MSCI LatAm                    1529.10               1.42
                                        
 Brazil Bovespa               72310.67               1.89
                                        
 Mexico IPC                   33464.71              -0.67
                                        
 Chile IPSA                    3559.25               4.03
                                        
 Argentina MerVal             25803.27              1.891
                                        
 Colombia COLCAP               1095.40               3.05
                                        
                                                         
       Currencies             Latest     Daily % change
 Brazil real                    5.2623              -0.05
                                        
 Mexico peso                   24.3800              -0.73
                                        
 Chile peso                      858.8               0.28
                                        
 Colombia peso                    4024               1.52
 Peru sol                       3.4398               0.73
                                        
 Argentina peso                64.7175              -0.29
 (interbank)                            
                                        
 
 (Reporting by Ambar Warrick and Susan Mathew in Bengaluru
Editing by Alistair Bell and Matthew Lewis)
  

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They all retired before they hit 40. Then the coronavirus happened

NEW YORK (NYTIMES) – Last month, Mr Eric Richard was in Bali, Indonesia, enjoying the tropical weather and carefree life of a retiree. Last summer, at age 29, Mr Richard had quit his job as a corporate operations manager to become a “digital nomad”.

Now he is hunkered down at his parents’ house in Michigan, having returned to the United States as concerns over the coronavirus outbreak grew and travel bans were put in place around the world. He is in self-isolation as a precaution. And in recent weeks, he said, he has seen his net worth drop by more than US$100,000 (S$144,000).

“It’s definitely not a great feeling, to say the least,” Richard said.

He is an adherent of the Fire movement, the personal finance strategy popular among millennials. It stands for “financial independence, retire early”.

The Fire movement was born during the US stock market’s historic 11-year-long, wealth-creating run. Professionals in their 30s and 40s were saving up million-dollar nest eggs and quitting their jobs in the prime of life to live off investments. It was unheard-of in modern times, at least for anyone without a trust fund.

Now the coronavirus has thrashed several nation’s economies, from Japan to Germany. The US stock market had its steepest drop ever in March. Naturally, some are predicting the decline or end of the Fire lifestyle.

Mr Pete Adeney, aka Mr Money Moustache, a guru of the movement, said he had been hearing from disciples who were asking if they should “sell everything now”. Reddit’s Fire message board is filled with nervous chatter, as those “firing” and those who have already “fired” seek advice and comfort.

“Anybody here own property they use as Airbnb’s?” one user asked, referring to a popular Fire strategy for generating income. “What’s your situation looking like?”

The answer came back: “Airbnb is a mess right now.”

In 2018, many people in the Fire movement believed they had the financial resources to enjoy retirements as long as six decades. If they whittled their living expenses to nothing and withdrew no more than 4 per cent each year from their portfolio (known as the 4 per cent rule), all would be fine.

Ms Kristy Shen and Mr Bryce Leung, a married couple from Toronto who in 2015 quit their tech jobs in their early 30s to travel the world, were also in Bali when the global outbreak struck. They watched their investment portfolio drop by six figures in one day, a stomach-churning moment for anyone.

But the couple, who wrote a Fire how-to guide, Quit Like A Millionaire, consider themselves “some of the most pessimistic people in this space”, Ms Shen said. That caution, along with their engineer training to create multiple backup plans, has served them well.

“Based on interest and dividends that got paid out last year, we can cover this year’s expenses,” Ms Shen said.

Mr Leung, who invested through the Great Recession, added: “There was a lot more reason to be scared in 2008. They were saying money is going to be toilet paper.”

Mr Jason Long, a former pharmacist in rural Tennessee who retired in 2017 at age 38, with about US$1 million, said he was better off now than then – even after the stock market plunge and discounting his living expenses. For three years, he has sat back and watched his investments grow.

“We’re in a society that values capital more than labour,” Mr Long said. “I don’t like that, but I take advantage of it, I guess.”

Mr Long said he felt for the Fire folks who retired in 2019 and had less of a cushion. “I probably wouldn’t have been able to sleep if I had been in that situation,” he said.

That unfortunate circumstance is where Mr Richard finds himself. Not only did he retire less than a year ago, but he also practises “lean Fire” – generally defined as a net worth of between US$500,000 and US$1 million (as opposed to the US$1 million and more many accumulate before “firing”).

And with the current travel restrictions, Mr Richard and others can’t live in a cheap foreign country, a common Fire tactic known as “geographic arbitrage”. In Bali, for instance, he and his girlfriend were staying in “a lovely guesthouse with a pool”, minutes from the beach, he said, for less than US$800 a month. Who knows when he can get back?

Still, he had his own lucky timing: He sold a portion of his investments in February, at the peak, earnings he will live on until the market comes back. And if the market continues to go down, Mr Richard said: “I wouldn’t be opposed to picking up part-time or freelance work. Financial independence, to me, gave me the freedom to leave my corporate job to pursue things I’m passionate about. It’s not about never doing anything to earn money again.”

Ms Shen and Mr Leung are similarly sanguine about their continued future as millennial retirees, though they are making lifestyle adjustments. “Going forward, we are going to live on US$40,000 a year, and maybe less,” Ms Shen said. “Because I’m finding all kinds of deals.”

Indeed, the couple, back in Toronto and self-isolating for two weeks, will soon be moving into a two-bedroom condo downtown they found on Airbnb that normally rents for US$111 a night.

The rate now? It’s US$39.

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