Emerging stocks rise off 9-mth lows after bruising week
By Claire Milhench
LONDON, June 22 (Reuters) - Emerging stocks rose off
nine-month lows on Friday but were still set for their worst
week since mid-March after an escalation in a trade dispute
between the U.S. and China clobbered global markets.
MSCI's benchmark emerging stocks index was trading
up 0.5 percent after hitting its lowest since end-September, but
was still set to end the week down around 2.5 percent.
The average yield spread of emerging market sovereign bonds
over U.S. Treasuries on the JPMorgan EMBI Diversified index also
narrowed 5 basis points (bps) to 357 bps, reflecting the
stabilisation in markets.
Investors ran for the door earlier in the week after the
stakes were raised in the ongoing tit-for-tat trade war between
the United States and China. The worry is that increased
protectionism will crimp exports and hinder global growth.
According to data cited by Morgan Stanley, some $5.9 billion
was pulled from dedicated EM equity funds (ex-China A shares) in
the week ended June 20, the highest outflows since September
On Monday U.S. President Donald Trump threatened to expand
the amount of Chinese imports facing tariffs to $200 billion if
Beijing retaliated to his previous target of $50 billion. The
U.S. Commerce Secretary reiterated warnings on Thursday.
Meanwhile other countries have responded, with India joining
the European Union and China in retaliating against U.S. tariff
hikes on steel and aluminium by raising import duties on various
goods including almonds and walnuts.
Unsurprisingly, Asian markets have taken the biggest hit,
plumbing six-month lows, although some staged a late session
recovery to close up on Friday.
Chinese mainland shares rose 0.45 percent after
hitting one-year lows, but are set for a weekly loss of 3.8
percent, their worst since February.
Shanghai shares hit a fresh two-year low before
closing up 0.5 percent, while Hong Kong stocks rose 0.3
percent after hitting six-month lows.
The yuan also slipped to a more than five-month low
against the dollar, and was set for its worst week since
September 2017, down 0.8 percent.
But with the dollar index down 0.2 percent some
currencies managed to gain ground after a volatile week.
Turkey's lira scraped into positive territory as the
country prepared to go to the polls this Sunday.
President Tayyip Erdogan is aiming to extend his 15-year
rule and assume sweeping new powers which he says the country
needs to address threats to the economy and security.
William Jackson, senior emerging market economist at Capital
Economics, noted there had been worrying comments from Erdogan
in the run up to the election, potentially reinforcing concerns
that a presidential win for him will signal a further shift
towards unorthodox policy-making.
"In the past, a victory for Erdogan and the AKP has prompted
a rally in the markets as it has been perceived as sign of
political stability. But I do wonder if it will be the same this
time round," he said.
Polls indicate the elections may be closer than anticipated
when Erdogan called the snap elections in April.
The Russian rouble was the big gainer, firming 0.9
percent, helped by a 1.2 percent gain in the oil price
as the market looked for OPEC to announce an increase in oil
production at its Vienna meeting.
India's rupee gained 0.2 percent and South Africa's
rand 0.4 percent, but the latter was still set for a
weekly loss after the country's current account deficit
registered its largest shortfall in two years in Q1 after a
steep decline in exports.
Speaking at an event in London, South Africa's finance
minister said that restructuring state-run power firm Eskom was
"on top of the agenda" and that recent outages had had a "very
minimal" impact on the economy.
The Mexican peso also firmed 0.2 percent and posted a
weekly gain of 1.7 percent after the central bank raised rates
by 25 basis points to 7.75 percent, its highest level in more
than nine years.
In emerging Europe, most currencies firmed against the euro,
with the Hungarian forint gaining 0.5 percent.
However, it is still set for a weekly loss of 0.6 percent and
remains near an all-time low versus the euro hit in 2015.
For GRAPHIC on emerging market FX performance 2018, see http://tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2018, see http://tmsnrt.rs/2dZbdP5
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see)
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 1086.47 +6.28 +0.58 -6.21
Czech Rep 1067.89 +3.45 +0.32 -0.95
Poland 2169.27 +18.36 +0.85 -11.86
Hungary 35341.04 +291.49 +0.83 -10.25
Romania 8116.22 -7.78 -0.10 +4.67
Greece 785.13 +12.24 +1.58 -2.15
Russia 1127.46 +16.67 +1.50 -2.34
South Africa 50321.26 +297.72 +0.60 -4.21
Turkey 95107.56 +50.32 +0.05 -17.54
China 2889.95 +14.14 +0.49 -12.62
India 35501.13 +68.74 +0.19 +4.24
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 25.76 25.86 +0.37 -0.92
Poland 4.32 4.33 +0.25 -3.28
Hungary 324.50 326.12 +0.50 -4.31
Romania 4.67 4.67 -0.01 +0.21
Serbia 117.90 117.89 -0.01 +0.42
Russia 63.06 63.64 +0.91 -8.57
Kazakhstan 339.96 341.51 +0.46 -2.11
Ukraine 26.23 26.28 +0.19 +7.30
South Africa 13.53 13.57 +0.32 -8.66
Kenya 100.65 100.65 +0.00 +2.43
Israel 3.62 3.62 +0.15 -3.80
Turkey 4.71 4.72 +0.25 -19.52
China 6.49 6.49 -0.05 +0.20
India 67.79 67.94 +0.22 -5.84
Brazil 3.77 3.77 +0.06 -12.04
Mexico 20.27 20.32 +0.26 -3.06
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 378 -4 .18 7 65.84 1
(Reporting by Claire Milhench
Editing by Raissa Kasolowsky)
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