LONDON Jan 15 Emerging equities slipped on
Tuesday despite a further surge in Chinese stocks, as a recent
run of gains in riskier assets was checked by worries over the
debt ceiling debate in the United States.
Investors sought the shelter of U.S. dollar assets after
U.S. Federal Reserve Chairman Ben Bernanke warned economic
recovery was at risk from the battle to raise borrowing limits.
MSCI's emerging equities index eased 0.4 percent,
inching further away from recent nine-month highs.
But Chinese stocks rose 0.6 percent to seven-month
highs as markets cheered signs of economic recovery and news
Beijing may raise foreign investment quotas.
MSCI's China index, which includes Chinese shares listed in
Hong Kong, touched the highest levels since August 2011.
In emerging Europe, Turkish stocks powered to a new record,
bringing year-to-date gains to more than 5 percent.
The Hungarian forint rose 0.2 percent, coming off recent
seven-month lows. Five-year credit default swaps rose
10 bps to four-week highs, however, Markit said.
Budapest mandated banks on Monday to arrange meetings with
investors, which may lead to its first hard currency bond since
2011. An issue would make it easier for Hungary to shun an aid
deal with the International Monetary Fund.
The Polish zloty fell 0.3 percent, reacting to
continued verbal intervention from policymakers
and news the government would carry out conversion of EU funds
outside currency markets to avoid strengthening the zloty.
The "zloty is under pressure because German Bunds have come
off quite a bit recently and that puts pressure on the back end
of the Polish curve, which has lots of foreign participation,"
said Manik Narain, a strategist at UBS in London.
German and U.S. yields have risen to multi-month highs this
year as hopes have grown of a lasting economic recovery.
"There are also lots of long zloty/short forint positions
out there which could unwind after a good run, so we may get a
few days of correction," Narain added.
The Russian rouble stayed flat to the dollar after
the central bank kept interest rates unchanged.
Some analysts noted the bank's emphasis on inflationary risks.
"We expect one more 25 bp hike in February. However,
monetary tightening is unlikely to be aggressive, as economic
slowdown has become evident," BNP Paribas said in a note.