LONDON, April 3 Emerging stocks dipped from 2014
highs on Thursday, dulled by weakness in emerging market service
sector data, but remained in the black for the year on waning
investor worries over Russia and Ukraine and a dash towards
Support for Ukraine from the IMF and other Western
governments has reassured investors following Russia's
annexation of Crimea.
Russia's services sector, however, contracted sharply, to
47.7 in March from 50.8 in February, data showed on Thursday,
and South African services data also fell.
"(Weak PMI) forced people to pare back long emerging market
positions," Peter Attard Montalto, emerging markets economist at
The MSCI emerging equities index rose to its
highest since mid-December before trimming gains.
Stocks have jumped by 6.6 percent in the past two weeks,
however, boosted also by a reconsideration of the sector by
investors due to cheap valuations.
Chinese stocks dropped 0.7 percent on
Thursday on profit-taking in property stocks, although service
sector activity ticked up in March.
Emerging sovereign debt spreads edged out 1 basis
point to 316 bps over U.S. Treasuries. But spreads remain close
to their narrowest levels since May 2013, when then-Federal
Reserve chairman Ben Bernanke signalled a winding down of the
Fed's bond-buying programme.
Frontier market borrowers Ecuador, Pakistan and Zambia are
meeting investors this week to discuss possible dollar-borrowing
plans. Even Ukraine is considering issuing a 5-year eurobond in
the second half of this year.
Most emerging European currencies were steady, with the
Turkish lira close to the year's highs following data
showing a larger-than-expected rise in inflation last month.
The rand fell 1 percent, however, with services PMI
falling to 50.2 in March from 51.5 in February.
Rising U.S. Treasury yields could also put renewed pressure
on emerging markets, analysts said, as investors bring their
For GRAPHIC on emerging market FX performance 2014, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2014, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2014, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2014, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
(Reporting by Carolyn Cohn and Natsuko Waki; Editing by Louise