(Official Markit correction of Bulgaria 5-yr CDS rise,
LONDON, March 4 Emerging stocks fell 1 percent
on Monday, hit by a 4 percent slump in China, while fears for
the Hungarian central bank's independence pushed the forint down
half a percent.
The latter also fuelled a rise in Hungarian debt insurance
Fresh curbs on the property sector, with a stricter
implementation of capital gains tax and higher loan rates for
second-home buyers, saw Chinese shares post their worst daily
losses since November 2010 .
MSCI's emerging equity index, of which China is
the biggest component, fell 1 percent. Sentiment also was
knocked by political stalemate in Italy and the United States,
where politicians failed to avert huge spending cuts from being
The forint was hit by concern that changes at the
central bank would lead to major monetary policy easing,
particularly with the appointment of Economy Minister Gyorgy
Matolcsy to be chief..
Hungarian 5-year credit default swaps rose 9 basis points to
4-1/2 month highs of 322 bps, and have risen 50 bps since the
start of 2013, according to Markit data.
Citi said forward rate agreements now price Hungarian
interest rates at 4.25-4.5 percent, from 5.25 percent now.
"The big reshuffle at the core of the MPC (monetary policy
committee) will open the way for potential unorthodox measures
on the monetary policy front, along with some continuation in
the easing cycle," they said.
In neighbouring Bulgaria, 5-year CDS rose 4 bps to 135 bps,
the highest since October, on fears of political limbo after
violent protests toppled the government.
South Africa's rand traded at one-month lows while
stocks fell 0.7 percent, led by miners which suffered
from fears of a manufacturing slowdown in China. Long-dated
bonds were hit by higher debt issuance plans outlined in last
week's budget, with 10-year yields at one-month highs.
Egyptian CDS were at 610 bps, the highest since June, while
the currency touched a new record low against the dollar.
(Reporting by Sujata Rao. Editing by Jeremy Gaunt.)