August 11, 2016 / 10:16 AM / 2 years ago

EMERGING MARKETS-Ukrainian assets hit as tensions flare with Russia, EM stocks slip

LONDON, Aug 11 (Reuters) - Ukrainian assets slipped on Thursday as tensions flared with Russia, while broader emerging stocks snapped a five-day winning streak on fresh oil price falls.

Ukrainian dollar bonds fell as much as 1.5 cents across the curve and stocks fell 0.65 percent after Russian President Vladimir Putin accused Ukraine of trying to destabilise Crimea by sending saboteurs into the contested peninsula.

Kiev denied the allegations, which also knocked the Ukrainian hryvnia down 0.18 percent against the dollar.

“The market has become very complacent over Russia geopolitical risks,” Tim Ash, an analyst at Nomura International, said in a note. “The Obama administration would respond to further Russian escalation in Ukraine by pushing to enact yet more sanctions on Russia.”

MSCI’s benchmark emerging equity index lost 0.1 percent, reversing recent gains after losses on Wall Street. Guillaume Tresca, senior emerging markets strategist at Credit Agricole, said markets were pausing after recent strong gains.

“Risk sentiment is declining a little bit,” he said, adding that the environment remained generally supportive for emerging markets, which have been trading at one-year highs on inflows from investors seeking out higher yielding assets.

But a move lower in the Brent oil price to around $44 a barrel, and a cut in Singapore’s economic growth forecast for 2016 on concerns over weaker global demand, took the wind out of the rally on Thursday.

Amongst the biggest fallers were Chinese mainland stocks , down 0.5 percent, and Taiwan shares, down 0.75 percent. South Africa stocks lost 0.4 percent and Russian dollar-denominated shares fell 0.2 percent.

Mongolia’s currency and dollar-denominated bonds sold off after the government warned of an economic crisis.

The tugrik has fallen around 11 percent against the dollar since June 24, whilst the $1 billion 2022 eurobond tumbled over 5 cents to 84.6 cents, the lowest level since July 5. The 2021 bond also sold off around 4.6 cents to the lowest level since June 30.

The Turkish lira softened 0.2 percent against the dollar, and the South African rand weakened 0.4 percent.

Turkish President Tayyip Erdogan has told banks they should not be charging high interest rates in the wake of a failed coup and has promised to take action against lenders who “go the wrong way” on rates.

Tresca said this suggested previous measures put in place to cap consumer demand and curb the current account deficit were being relaxed. Current account figures released on Thursday showed the deficit had increased in June by more than forecast due to falling tourism revenues.

“Crucially, however, these figures predate July’s attempted coup, which is likely to cause conditions in the tourism sector to deteriorate further,” William Jackson, senior EM economist at Capital Economics, said in note.

Earlier in Asia, the South Korean won fell 0.3 percent as traders cited heavy intervention to weaken the currency after it hit a near 15-month high on Wednesday. The central bank left interest rates unchanged at a record low of 1.25 percent but a rate cut is expected before year end.

The central banks of Mexico, Peru and Serbia, which also meet on Thursday, are expected to keep rates unchanged.

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 902.10 -0.89 -0.10 +13.59

Czech Rep 860.52 +1.34 +0.16 -10.02

Poland 1850.63 -1.91 -0.10 -0.46

Hungary 27545.84 +43.62 +0.16 +15.16

Romania 6813.54 -18.90 -0.28 -2.72

Greece 569.89 +2.61 +0.46 -9.73

Russia 940.67 -5.96 -0.63 +24.26

South Africa 44947.71 -184.35 -0.41 -1.86

Turkey 78170.95 +215.30 +0.28 +8.98

China 3002.67 -16.07 -0.53 -15.16

India 27803.11 +28.23 +0.10 +6.45

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2016

Czech Rep 27.01 27.03 +0.06 -0.06

Poland 4.26 4.26 -0.10 -0.15

Hungary 310.06 310.32 +0.08 +1.48

Romania 4.46 4.46 -0.08 +1.33

Serbia 123.20 123.05 -0.12 -1.40

Russia 64.93 64.85 -0.12 +12.35

Kazakhstan 347.36 346.86 -0.14 -1.97

Ukraine 24.85 24.80 -0.18 -3.59

South Africa 13.34 13.27 -0.54 +15.93

Kenya 101.40 101.40 +0.00 +0.79

Israel 3.82 3.81 -0.10 +1.82

Turkey 2.96 2.96 -0.25 -1.59

China 6.64 6.63 -0.05 -2.20

India 66.85 66.76 -0.14 -0.97

Brazil 3.12 3.13 +0.07 +26.72

Mexico 18.41 18.42 +0.02 -6.74

Debt Index Strip Spd Chg %Rtn Index

Sov’gn Debt EMBIG 370 -1 .01 7 64.98 1

editing by John Stonestreet

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