MERCADOS EMERGENTES – Peso de Chile, acciones se desploman con choque de votos en la constitución

    * Chile's peso set for worst day in 3 months
    * Brazil's real down as COVID deaths cross new milestone

    By Ambar Warrick
    May 17 (Reuters) - Chilean stocks and the peso tumbled on
Monday after a shock result to the vote over the drafting of a
new constitution, while most other Latin American currencies
dropped as new COVID restrictions in Asia dented risk appetite. 
    The peso fell as much as 3.6% and was set for its
worst day since February, after the country's ruling
center-right coalition failed to secure a critical one-third of
seats in the body that will draft a new constitution, increasing
the chances of the passing of more radical proposals.

    Chilean stocks plunged more than 9% to their
lowest since late-Dec, while the country's sovereign
dollar-denominated bonds were largely stable.
    The vote was the result of fierce nationwide protests
against inequality in 2019, with the current constitution being
widely perceived to favor big businesses over the rights of
ordinary citizens.
    "The election results attest to deep distrust of the
political establishment and rejection of the traditional
political structures. This could translate into a very noisy
constitution drafting process," Goldman Sachs analysts wrote in
a note.
    "We expect the new Constitution to validate a larger, more
interventionist state... This would add further pressure on the
already deteriorating fiscal/debt dynamics, and a potential
shift away from hitherto investment-friendly policies and
institutions could weigh on medium-term macroeconomic
    Other Latam currencies fell, as new COVID-19 restrictions in
major Asian economies and disappointing Chinese data saw
investors pivot out of risk-heavy assets.
    The risk-off sentiment added to pressure on Latam assets,
given that the region has already been struggling with a
damaging wave of COVID-19 infections this year. 
    Disappointing retail sales and factory output data from
China also hurt regional sentiment, given that the country is a
major export destination for metals and agricultural goods from
    Brazil's real dropped 0.6% as deaths in the
country topped 435,000, the worst in the region.
    But a rash of recent interest rate hikes by Brazil's central
bank saw speculators going long on the currency in two years.
Investors also dialed up their expectations for economic growth,
data showed.
    Colombian markets were closed for a holiday. 
    Key Latin American stock indexes and currencies:
                              Latest     Daily % change
 MSCI Emerging Markets         1308.07               0.04
 MSCI LatAm                    2468.61              -1.32
 Brazil Bovespa              121995.61               0.09
 Mexico IPC                   49242.03               0.05
 Chile IPSA                    4137.35              -9.56
 Argentina MerVal                    -                  - Currencies             Latest     Daily % change
 Brazil real                    5.3022              -0.60
 Mexico peso                   19.8746              -0.09
 Chile peso                      714.4              -2.03
 Peru sol                        3.677              -0.01
 Argentina peso                94.1300              -0.08

 (Reporting by Ambar Warrick in Bengaluru
Editing by Marguerita Choy)
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