LONDON Jan 7 Emerging equities hit a four-month
low on Tuesday as weaker-than-expected U.S. data hit
export-sensitive Asia while a stronger dollar weighed on the
Turkish lira and other currencies reliant on capital inflows.
The MSCI's broad emerging equity index fell 0.2 percent
, losing ground for a fifth straight day and on track
for one of its worst five-day performances since June.
Asia led the losses as weak local currencies
weighed on the Indonesian and Philippine bourses, while emerging
Europe eked out some gains.
The Turkish lira fell 0.4 percent to 2.18 per dollar,
near the previous day's record low, while two-year bond yields
held above 10 percent, near the previous day's
On top of worries over the Federal Reserve's stimulus
withdrawal, a wide-ranging corruption investigation is clouding
the country's political outlook.
"The political in-fighting is continuing, which is not good
for the markets," said Thu Lan Nguyen, emerging markets
strategist at Commerzbank in Frankfurt.
The country's shares have stabilised however,
rising 0.2 percent.
Turkish Finance Minister Mehmet Simsek warned on Tuesday
that economic growth may be affected this year due to
"uncertainty" and lira weakness could push up inflation.
Emerging market assets have been under pressure as investors
fret that moves by the Federal Reserve to withdraw monetary
stimulus from this month could drain capital away from countries
in most need of external funding.
Disappointing U.S. and Chinese economic data also raised
concerns about economic growth in export-reliant countries. A
report released on Tuesday showed business activity in emerging
markets expanded at a lower rate in December, hit particularly
by a slowdown in service sector growth.
Polish stocks fell 2.2 percent while the zloty lost
0.1 percent against the euro.
This month's data showed Polish manufacturing activity
unexpectedly fell for the first time in eight months in
December, suggesting a slightly slower pace of expansion for
central and eastern Europe's largest economy.
In Asia, the Philippine peso hit its weakest level since
September 2010 at 44.851 per dollar after annual
inflation in December raced to a two-year high.
The Indonesian rupiah lost 0.7 percent to 12,255 per
dollar, edging closer to a five-year trough set on Dec. 27.
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