August 3, 2016 / 9:10 AM / 4 years ago

EMERGING MARKETS-Oil fall, Japan bond fracas knock emerging assets lower

LONDON, Aug 3 (Reuters) - Weakening oil prices and this week’s selloff on Japanese bonds dragged emerging stocks 1 percent lower on Wednesday while Turkish assets were knocked by data showing an inflation surge.

U.S. crude prices stayed under $40 per barrel and copper prices also slipped, reflecting weak world growth. Meanwhile doubts over Tokyo’s commitment to stimulus sparked the worst Japanese government bond selloff in three years.

These factors have combined to pull emerging stocks off the near one-year highs hit on Monday, pushing the MSCI index to a one-week low. With year-to-date gains of nearly 10 percent, it has outperformed most developed stock markets.

“This is a moment of pause in the risk-taking trend...we could be fluctuating slightly wider for emerging spreads for the time being,” said Luis Costa, head of CEEMEA debt and FX strategy at Citi.

But he said the case for bonds looked intact as weaker oil was benefiting importers and inflation, but had not yet triggered a selloff on U.S. high yield bonds that could filter into emerging debt.

Most emerging currencies fell, with the rand down 0.2 percent off recent nine-month highs as South Africans voted in municipal elections that are effectively a referendum on President Jacob Zuma’s leadership and the stagnant economy .

The lira slumped half a percent after data showed consumer inflation at 1.16 percent in July, exceeding forecasts of 0.9 percent and giving an annual 8.79 percent rise .

Stocks fell 0.7 percent and 10-year yields jumped 20 basis points to one-week highs around 9.74 percent .

“The CPI is bringing about a bit of selloff in the rates market,” Costa said, adding the consequences of a July 15 failed coup and the subsequent crackdown were being felt and would be fully evident only over a few months.

Nomura analyst Tim Ash said the data showed the need for a pause in the rate cutting cycle.

“This data is pretty poor across the board - makes it hard to explain the last 25 basis point cut by the (central bank) last month, and surely now makes it difficult...to make another near-term rate cut.”

In eastern Europe, the Polish zloty inched to new two-month highs against the euro though stocks pulled back slightly after Tuesday’s 2 percent gains. Markets were boosted by news that conversions of Swiss franc mortgages into zloty would be less punitive for banks than feared

Czech stocks however fell 2 percent, led by a 7 percent plunge in Komercni Banka which pulled back from a policy of paying high dividends.

Russian stocks touched two-week lows, while the rouble was flat against the dollar, shrugging off data showing the fastest services sector expansion since 2013.

Meanwhile Ghana is expected to issue an amortizing dollar-denominated bond of up to $1 billion at some point this week, according to sources and the lead organisers.

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

on year

Morgan Stanley Emrg Mkt Indx 867.87 -8.90 -1.02 +9.28

Czech Rep 854.74 -21.54 -2.46 -10.62

Poland 1797.59 -6.04 -0.33 -3.31

Hungary 27166.27 -0.80 +0.00 +13.57

Romania 6682.17 -2.56 -0.04 -4.60

Greece 553.53 +1.89 +0.34 -12.33

Russia 902.99 -0.05 -0.01 +19.28

South Africa 45559.57 -590.23 -1.28 -0.52

Turkey 75093.64 -710.28 -0.94 +4.69

China 2979.17 +7.89 +0.27 -15.82

India 27776.74 -204.97 -0.73 +6.35

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2016

Czech Rep 27.02 27.01 -0.04 -0.10

Poland 4.31 4.32 +0.26 -1.25

Hungary 311.07 310.93 -0.05 +1.15

Romania 4.45 4.45 +0.07 +1.61

Serbia 123.20 123.08 -0.10 -1.40

Russia 66.63 66.64 +0.02 +9.49

Kazakhstan 354.22 353.96 -0.07 -3.87

Ukraine 24.81 24.80 -0.05 -3.45

South Africa 14.02 13.99 -0.20 +10.29

Kenya 101.35 101.35 +0.00 +0.84

Israel 3.82 3.81 -0.43 +1.73

Turkey 3.01 2.99 -0.62 -3.07

China 6.63 6.62 -0.08 -2.06

India 66.95 66.67 -0.42 -1.12

Brazil 3.26 3.26 +0.03 +21.61

Mexico 18.95 18.93 -0.11 -9.39

Debt Index Strip Spd Chg %Rtn Index

Sov’gn Debt EMBIG 388 1 .03 7 54.21 1

All data taken from Reuters. Currency percent change calculated from the daily U.S. close at 2130 GMT.

For GRAPHIC on emerging market FX performance 2016, see link.reuters.com/jus35t

For GRAPHIC on MSCI emerging index performance 2016, see link.reuters.com/weh36s

For GRAPHIC on MSCI emerging Europe performance 2016, see link.reuters.com/jun28s

For GRAPHIC on MSCI frontier index performance 2016, see link.reuters.com/zyh97s

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 867.67 -9.10 -1.04 +9.26

Czech Rep 855.00 -21.28 -2.43 -10.60

Poland 1797.19 -6.44 -0.36 -3.33

Hungary 27205.16 +38.09 +0.14 +13.73

Romania 6688.65 +3.92 +0.06 -4.51

Greece 553.78 +2.14 +0.39 -12.29

Russia 901.49 -1.55 -0.17 +19.08

South Africa 45559.57 -590.23 -1.28 -0.52

Turkey 75099.26 -704.66 -0.93 +4.70

China 2979.17 +7.89 +0.27 -15.82

India 27797.61 -184.10 -0.66 +6.43

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2016

Czech Rep 27.02 27.01 -0.03 -0.09

Poland 4.32 4.32 +0.15 -1.35

Hungary 310.99 310.93 -0.02 +1.17

Romania 4.45 4.45 +0.04 +1.58

Serbia 123.20 123.08 -0.10 -1.40

Russia 66.61 66.64 +0.05 +9.52

Kazakhstan 353.24 353.96 +0.20 -3.61

Ukraine 24.81 24.80 -0.03 -3.44

South Africa 14.03 13.99 -0.29 +10.18

Kenya 101.35 101.35 +0.00 +0.84

Israel 3.82 3.81 -0.44 +1.72

Turkey 3.01 2.99 -0.62 -3.08

China 6.63 6.62 -0.08 -2.07

India 66.95 66.67 -0.42 -1.13

Brazil 3.26 3.26 +0.01 +21.59

Mexico 18.96 18.93 -0.20 -9.46

Debt Index Strip Spd Chg %Rtn Index

Sov’gn Debt EMBIG 388 1 .03 7 54.22 1

All data taken from Reuters at #N/A The record could not be found GMT. Currency percent change calculated from the daily U.S.

close at 2130 GMT.

Editing by Raissa Kasolowsky

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below