LONDON Feb 24 Emerging stocks fell on Monday as
Chinese shares posted their biggest loss in seven weeks on
worries about the property market, while Ukraine's debt
insurance costs dropped sharply on expectations of western aid.
Ukraine said on Monday it needed $35 billion in foreign
assistance over the next two years and appealed for urgent aid
after President Viktor Yanukovich was forced out of office at
In China, stocks slid around 2 percent
after news reports stoked fears that banks have begun tightening
loans to developers before next week's annual parliamentary
That fuelled worries about a slowdown in China's property
market and growth outlook.
"People are having a more negative view about China's
economy now than at the start of the year and it's still playing
out," said Peter Attard Montalto, emerging markets economist at
The MSCI emerging equities index fell 0.34 percent
though emerging sovereign debt spreads edged in by 1
basis point to 362 basis points over U.S. Treasuries.
Ukraine's five-year credit default swaps (CDS) fell 161
basis points from Friday's close to a 3-week low of 946 bps,
according to Markit.
"Political considerations in this instance override economic
or financial ones and ... western aid is likely to be
substantial enough to prevent a credit event from taking place
in the short term," Goldman Sachs said in a client note,
referring to the risk of default or restructuring.
Ukraine's 2023 dollar bond rose 6 points to a
four-week high of 90 cents on the dollar, according to Reuters
The 2017 dollar bond gained 7.8 points to a
three-week high of 95, while the 2022 dollar bond
rose 5 points to a three-week high of 90.
But the hryvnia fell to a five-year low. Analysts
said the country is running out of foreign exchange reserves to
support it and is likely to focus its use of funds on repaying
"Given that international reserves have likely, on our
estimates, declined ... to $12-14 billion, we think downside
risks to the UAH (hryvnia) remain large," Goldman Sachs added.
Other emerging European currencies were generally steady,
supported by the news from Ukraine. The rouble hit a
six-day high against the dollar.
Nigeria's naira fell 0.6 percent and stocks
hit three-month lows in sustained weakness since
President Goodluck Jonathan suspended graft-fighting central
bank governor Lamido Sanusi last week. Sanusi said on Friday he
would go to court to challenge the suspension.
Egyptian stocks were trading at 5-1/2 year highs as
the military-backed government resigned, in a move likely to
pave the way for army chief Field Marshal Abdel Fattah al-Sisi
to declare his candidacy for president.
Venezuela's five-year CDS eased but remain at extremely
distressed levels above 2,000 bps, according to Markit, after
nearly two weeks of violent anti-government protests that have
killed at least eight people.
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