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EMERGING MARKETS-Carnage in Argentine markets after Macri suffers blow in primaries

Agamoni Ghosh


* Argentina's peso hits record low

* Merval index plummets nearly 10%

* Bleak chances of Macri winning October elections

Aug 12 (Reuters) - Argentina's peso collapsed on Monday after voters rejected President Mauricio Macri's austere economic policies and gave Alberto Fernandez and his running mate, former President Cristina Fernandez de Kirchner, a victory in presidential primaries on Sunday. The peso fell to a record low, as much as 30% against the dollar in early trade, as Macri lost by a far greater margin than expected. The result cast serious doubt on Macri's chances of re-election for a second term in October, with analysts warning of widespread panic in financial markets in the coming days. "This result is much more extreme than our market bear case scenario," BAML analysts said in a note. "Fernandez has emphasized the peso is extremely over-valued and needs a correction. We expect heavy pressure in ARS with a potential devaluation in coming weeks." The carnage was a reminder for markets of a 26% plunge in the peso on Dec. 17, 2015, when the newly elected Macri government floated the currency as part of a slew of promised free-market reforms aimed at aiding the crisis-ridden economy. Shares on the Merval index opened 9% lower, with cement producer Loma Negra, financial conglomerate Grupo Supervielle SA and electricity distributor Pampa Energia SA, all dropping over 30%. The steep moves in Argentina pressured the Latin American index of currencies, which dropped over 2%, while stocks fell over 4%. Brazil's real fell below the 4.00 per dollar for the first time since late May, feeling the heat from its neighboring market's volatility, while Mexico's peso lost over 1%. Chile's peso fell nearly 1.5%, with dropping copper prices adding pressure on the world's largest producer of the red metal. All major stock indices were in the red, but Colombia's IGBC index managed to outperform, only 0.1% lower compared with its Latin American peers.

Key Latin American stock indexes and currencies at 1440 GMT:

Stock indexes Latest Daily %


MSCI Emerging Markets 972.81 -0.85MSCI LatAm 2651.24 -4.18Brazil Bovespa 101904.97 -2.01Mexico IPC 39941.90 -1.19Chile IPSA 4808.06 -2.14Argentina MerVal 39631.80 -10Colombia IGBC 12492.79 -0.1Currencies Latest Daily %


Brazil real 4.0017 -1.55Mexico peso 19.6282 -1.16Chile peso 717.8 -0.93Colombia peso 3433.8 -1.19Peru sol 3.396 -0.47Argentina peso 57.0000 -25.54

(Reporting by Agamoni Ghosh and Susan Mathew in Bengaluru; editing by Jonathan Oatis)