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)

By Susan Mathew

June 30 (Reuters) - 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



Currencies in 2022 Link
EM stocks H1 Link



Reporting by Susan Mathew and Devik Jain in Bengaluru;
Editing by Nick Zieminski

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