News: NAB EMERGING MARKETS-Most Latam stocks set for worst quarter since March 2020

• EM stocks set for worst H1
• Colombia hikes by 150 bps to 7.5%
• Inflation in Brazil seen decelerating - central bank

(Updates prices)

Latin American stocks fell on Thursday, with most marking their worst quarter since the pandemic-plagued first quarter of 2020, while a large interest rate hike by Colombia's central bank knocked local stocks to session lows.

Worries about the fallout from the conflict in Ukraine, and surging inflation causing aggressive central bank moves, have kept investors jittery so far this year.

"A deterioration in macroeconomic conditions is becoming more visible in emerging markets, raising the level of investor unease," said Alejo Czerwonko, chief investment officer, EM Americas, at UBS Global Wealth Management.

MSCI's index of emerging market stocks .MSCIEF is down about 19% since the beginning of the year, its worst first-half on record. Its currencies counterpart's 4% slide is its worst since the first six months of the pandemic ravaged 2020 .MIEM00000CUS .

But in the light of economic uncertainties, emerging market assets offer portfolios an inexpensive way to diversify compared with developed market assets, Czerwonko said.

"While U.S. stocks have only recently reached long-term valuation averages, emerging market equities are already trading at an 11x forward price-to-earnings ratio, well below their 10-year mean."

In Latam, stocks slipped, with Brazil's benchmark index .BVSP down 1.3%, as Wall Street looked to end the last session of one of its worst first halves in the red.

Over the quarter, Chile's index .SPIPSA was on track to end about 0.8% higher, outperforming not just regional peers, but broader emerging markets .MSCIEF whose quarterly losses were only topped by the slide in March 2020.

Colombia's index .COLCAP lost 0.7% on Thursday after the central bank raised interest rates by 150 basis points to 7.50%, as expected, as the battle against inflation continued.

In what could further bolster Colombia's currency COP= when it reacts to the decision on Friday, the bank raised its economic growth outlook for 2022 to 6.3%, from 5.0% previously.

Colombia's leftist President-elect Gustavo Petro picked market-friendly Jose Antonio Ocampo to be finance minister.

"It may be a positive thing for the country that Petro is choosing a very mixed cabinet. So that, in long term, will help the Colombian peso," Juan Perez, senior currency trader at Monex USA, said.

Brazil's real BRBY fell 0.8%. Its central bank expects 12-month inflation to decelerate to 11.31% in August from 11.73% in May, in line with its expectation that inflation will have peaked.

The real BRL= was on course for a near 10% quarterly slide, compared with a 1.4% slide in the Mexican peso MXN= .

Key Latin American stock indexes and currencies 1921 GMT:

Stock indexes Latest Daily %

									  change 
 MSCI Emerging Markets	   1001.80	-1.13 

.MSCIEF MSCI LatAm 2049.25 -0.88

.MILA00000PUS Brazil Bovespa 98418.82 -1.21

.BVSP Mexico IPC 47900.78 -0.33

.MXX Chile IPSA 4971.31 -0.76

.SPIPSA Argentina MerVal 88635.33 0.573

.MERV Colombia COLCAP 1337.73 -0.68

.COLCAP

	   Currencies		   Latest	Daily % 
									  change 
 Brazil real				  5.2299	-0.76 

BRBY Mexico peso 20.1440 -0.16

MXN=D2

 Chile peso					917.2	 0.96 
  CLP=CL							   

Colombia peso COP= 4141.97 -0.83 Peru sol 3.8152 -1.12

PEN=PE Argentina peso 125.2100 -0.13 (interbank) ARS=RASL

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Currencies in 2022	https://tmsnrt.rs/3NvasLI 

EM stocks H1 https://tmsnrt.rs/3OPybqY

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