As Latin America faced a downturn in economic growth amid increased political uncertainty, total returns for S&P Global Market Intelligence-tracked Latin American bank indexes delved into negative territory, with the Caribbean index as the sole exception.
Among the Market Intelligence-tracked Latin American bank indexes, the SNL Brazil bank index ended the third quarter with the lowest rate and dropped 11.2%. After staying mostly in positive terrain until July 24 and reaching its peak of 4.30% in mid-July, the index slid into negative territory on July 25. It continued its downward trend until Aug. 6, when it began to recover following the central bank's decision to cut its benchmark Selic rate by 50 basis points to 6.00% amid expectations for a slower economic recovery in Brazil.
After teetering in the negative region reflecting diminishing investor confidence, the SNL Brazilian index started to rise from Sept. 4, when the country's Senate constitutional affairs committee approved a bill that would overhaul the pension system.

The SNL Mexico Bank index showed an upward movement in the start of the quarter until July 9, when it slid amid "discrepancies in economic matters" which led to the resignation of Finance and Public Credit Minister Carlos Urzúa. The index closed the quarter at -10.6% and spent most of the period on the negative side, as investors became bearish over the lack of clarity around domestic policies pertaining to state-run oil company Pemex and the country's budget for 2020.
The Mexican index moved upward in mid-August after the central bank lowered the benchmark interest rate for the first time in five years by 25 basis points to 8.00%, due to lower inflation and slower economic growth. The index also showed signs of recovery near the end of the third quarter, around the time the central bank announced the launch of a new digital payment platform CoDi to boost digital transactions.
The SNL Southern Cone Bank index ended the third quarter with a total return of -7.2%. The index lingered mostly in the negative region mainly caused by the situation in Argentina, where bank stocks plummeted as the country's President Mauricio Macri suffered a setback in the Aug. 11 primary vote.
The financial markets reacted negatively to a debt restructuring process initiated by the government, while the capital controls reintroduced by Macri also resulted in the country's assets falling sharply. The country also saw its interest rate hit historically high levels at 84.14% in mid-September, due to persistently elevated inflation and a depreciating peso.
The SNL Caribbean Bank index was the sole exception to the downward turn and stayed steady, lingering close to 0% throughout much of the quarter to end on positive ground at 1.2%, outperforming regional neighbors.
