| LONDON, April 7
LONDON, April 7 Russian stocks tumbled more than
1 percent on Monday and the rouble slipped on worries over
renewed tensions with Ukraine while broader emerging equities
and currencies also eased, tracking moves on global markets.
Pro-Russian protesters seized official buildings in several
eastern Ukrainian cities on the weekend, including the mining
city of Donetsk. They demanded a referendum on whether to join
Russia like that held in Crimea that paved the way for its
annexation by Russia.
The fear of more confrontations between Russia and Ukraine
hit Russian assets, with stocks fell to one-week lows
after three straight weeks of gains. Blue chip shares such as
Sberbank, Gazprom and Lukoil slipped 1-2 percent.
"The events show that the risk of further secessions is a
very real one in coming months," UBS strategist Manik Narain
The rouble fell 0.6 percent to the dollar, and
Russian 5-year credit default swaps rose 9 basis points to 219
Ukrainian assets also were punished, with dollar bonds
losing around 1.0-1.5 points and CDS rising 14 bps.
Broader emerging equities slipped after three weeks of gains
, tracking losses in developed markets which saw a
pullback from record highs after March U.S. jobs data.
The data eased concerns about an early U.S. interest rate
hike but also suggested the economy was still in recovery mode,
a scenario generally seen as positive for emerging markets.
Narain said investors were hopeful of additional stimulus
from China as well as the European Central Bank and as yields in
peripheral Europe fell to multi-year lows, many fund managers
could turn to emerging debt instead.
The past week has seen bond roadshows by higher-risk
countries such as Pakistan, Zambia and Ecuador while Sri Lanka,
rated BB minus, is also gearing up to sell debt.
"It all seems to reflect optimism on the stability of U.S.
and eurozone rates. The back end of the Treasury curve has been
very stable with low volatility and that's what EM issuers
need," Narain said.
Zambia has opened books on a new 10-year dollar bond, with
initial price talk at 8.75-8.875 percent, Thomson Reuters market
service IFR reported on Monday.
In Hungary, financial markets slipped after the ruling
Fidesz party's landslide win and big gains for the far-right
opposition in elections. That sets the stage for four more years
in power for Prime Minister Viktor Orban, whose policies are
broadly seen as market-unfriendly.
Five-year Hungarian CDS rose 8 basis points on the day, but
shares and the currency pared sharp opening losses
. Shares in Hungary's biggest bank, OTP, fell
almost 1 percent before recovering most of the losses.
"We expect a continuation of a strong anti-foreign capital,
statist agenda, as well as a rhetorical and governing style
designed to collide with the international community and the
European Union," analysts at Eurasia said in a note.
The Turkish lira slipped 0.2 percent off three-month
highs versus the dollar after the central bank governor
signalled a possible cut to the 12 percent overnight lending
rate. He stressed however the bank would decide the timing of
any policy changes, reacting to Prime Minister Tayyip Erdogan's
calls for an emergency rate cut.
Elsewhere, Nigerian assets were flat after the country
rebased its economic data for the first time since 1990, almost
doubling its gross domestic product figures and making it the
biggest economy in Africa. Its public debt ratio stands now at
just 11 percent of GDP.
"Investors will not be able to ignore the biggest economy in
Africa and one that's ranked 26th in the world," said Razia
Khan, an economist at Standard Chartered in London.
"But in the short-term I don't see any fall in borrowing
costs...Investors will wait for (Feb. 2015) elections with the
semi policy freeze and uncertainty associated with that."
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
(Editing by Hugh Lawson)