Bonds News

EMERGING MARKETS-EM stocks touch 5-mth highs, strong dollar pressures FX

LONDON, April 14 (Reuters) - Emerging market stocks struggled to a five-month-high on Thursday, extending gains into a sixth day, while many currencies came under pressure from a stronger dollar and from Singapore unexpectedly easing policy.

In its third policy easing in 15 months, the Monetary Authority of Singapore (MAS) said it would set the rate of appreciation of the Singapore dollar NEER policy band at zero percent and shift to a neutral policy stance - the first time it has done so since the global financial crisis.

The benchmark emerging equity index rose 0.23 percent, touching five-month-highs, led by a rally in Asia on hopes that other regional central banks might also ease.

Chinese mainland shares gained 0.4 percent, Hong Kong rose 0.85 percent and South Korea rallied 1.75 percent after the market was closed on Wednesday for a parliamentary election.

The gains extended into some emerging Europe bourses, with Budapest up 0.65 percent, Russian shares up 0.75 percent and Turkish stocks up 0.3 percent. But Prague lost 0.73 percent.

Meanwhile faced with a stronger dollar, currencies sold off, with the South African rand weakening 0.7 percent, the Turkish lira down 0.4 percent and the Russian rouble slipping 0.25 percent.

The Singapore dollar lost as much as 0.9 percent against the greenback, its biggest one day fall since August.

Singapore’s easing followed first quarter GDP data showing that the economy had stalled. The central bank also trimmed its forecast for economic growth in 2016.


One analyst, Cristian Maggio, head of emerging markets strategy at TD Securities, sounded a cautious note about the recent gains in emerging market currencies.

“We see no reason for the extension of the rally we have seen in the past week. The market has rallied too fast too soon,” he said.

Maggio said the last statement from the U.S. Federal Reserve had contributed to the enthusiasm, fuelling expectations that interest rates would not rise in developed markets for a while.

“But ... rates are not going higher because the global economy is not performing well, and that is no reason for optimism,” he added.

Other Asian currencies also came under pressure, with the Korean won losing 0.9 percent after the ruling party suffered a defeat in Wednesday’s election.

In China, the central bank set the yuan daily guidance rate at its softest level in April.

The Hungarian forint was a touch weaker against the euro ahead of the issuance of a renminbi bond, the first from Eastern Europe.

The Polish zloty slipped 0.3 percent against the euro. Rate-setter Grazyna Ancyparowicz said a rate cut would be justified if hot money from countries with negative interest rates flowed into Poland and destabilised its financial system, but the probability of this was low.

Ukraine’s restructured dollar bonds firmed as much as 0.7 cents across the curve as lawmakers approved Volodymyr Groysman as prime minister, paving the way for a new government.

Argentina’s 2033 dollar bonds rose 0.81 cents on the day to fresh record highs after a U.S. court ruling on Wednesday cleared the way for Argentina to pay its debts and return to global credit markets.

Brazil’s five-year credit default swaps fell to 341 basis points, according to Markit data, the lowest since early September, as a stream of defections from President Dilma Rousseff’s coalition made it more likely she would lose Sunday’s impeachment vote in Congress.

For GRAPHIC on emerging market FX performance 2016, see

For GRAPHIC on MSCI emerging index performance 2016, see

For GRAPHIC on MSCI emerging Europe performance 2016, see

For GRAPHIC on MSCI frontier index performance 2016, see

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see )

Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley Emrg Mkt Indx 846.45 +2.30 +0.27 +6.59

Czech Rep 889.13 -6.49 -0.72 -7.03

Poland 1947.14 +2.78 +0.14 +4.73

Hungary 26567.65 +155.62 +0.59 +11.07

Romania 6744.35 +12.37 +0.18 -3.71

Greece 547.22 -1.61 -0.29 -13.33

Russia 924.88 +2.38 +0.26 +22.17

South Africa 46657.56 +39.84 +0.09 +1.88

Turkey 85884.85 +188.18 +0.22 +19.74

China 3082.54 +15.90 +0.52 -12.90

India 25626.75 +481.16 +1.91 -1.88

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2016

Czech Rep 27.02 27.03 +0.01 -0.09

Poland 4.30 4.29 -0.29 -0.94

Hungary 311.04 310.75 -0.09 +1.16

Romania 4.47 4.47 -0.05 +1.12

Serbia 122.77 122.96 +0.15 -1.06

Russia 66.33 66.22 -0.17 +9.98

Kazakhstan 335.03 333.50 -0.46 +1.63

Ukraine 25.65 25.46 -0.74 -6.62

South Africa 14.63 14.52 -0.76 +5.68

Kenya 101.15 101.10 -0.05 +1.04

Israel 3.78 3.77 -0.27 +2.82

Turkey 2.86 2.85 -0.46 +2.03

China 6.48 6.48 -0.09 +0.14

India 66.64 66.49 -0.23 -0.66

Brazil 3.50 3.50 +0.04 +13.26

Mexico 17.50 17.43 -0.45 -1.91

Debt Index Strip Spd Chg %Rtn Index

Sov’gn Debt EMBIG 422 1 .04 7 13.58 1

Additional reporting by Karin Strohecker; Editing by Gareth Jones