LONDON, Aug 19 (Reuters) - Emerging equities slipped on Friday after comments from U.S. Federal Reserve officials suggesting a rate rise soon was still on the cards, whilst a stronger dollar held back emerging currencies.
Emerging market assets have been driven all week by comments from Fed policymakers on whether rates will rise this year.
The benchmark emerging stocks index was down 0.8 percent, on course to end the week marginally in the red after mixed messages from the Fed.
Comments in favour of a hike soon came from San Francisco Federal Reserve Bank President John Williams and his New York counterpart William Dudley.
But minutes from the U.S. central bank’s latest meeting, released on Wednesday, showed policymakers are split over whether to press ahead quickly with rate rises.
“EM overall has been quite resilient despite the contrasting rhetoric,” said Roxana Hulea, an EM strategist at Societe Generale. “People are reassessing the balance of risks ahead ... but overall I don’t see a sustained risk off move for EM.”
Nevertheless, the confusion meant EM stocks struggled to make headway on Friday, with emerging Europe opening weaker after a lacklustre performance in Asia.
Russian dollar-denominated stocks lost 0.95 percent, Polish shares were down 1 percent and Turkish stocks lost 0.6 percent.
Earlier, in Asia, Chinese mainland shares rose 0.15 percent but Hong Kong shares lost 0.4 percent, and Taiwan fell 0.97 percent, with the government’s 2017 budget offering little to boost the economy.
With the dollar firming as much as 0.3 percent against a basket of currencies, emerging market currencies mainly lost ground.
The South African rand was one of the biggest fallers, losing 1.2 percent, whilst the Turkish lira weakened 0.5 percent ahead of a Fitch Ratings review later on Friday.
Fitch is the only one of the big three ratings agencies that has Turkey on a stable outlook. Analysts think a change to negative is possible after the failed coup and deteriorating economy.
“The lira is still outperforming the rand but in duration products there is some evidence of this news being priced in, so a positive outcome could boost the appetite afterwards,” said Hulea.
The Russian rouble gave up 0.6 percent as oil prices drifted lower and over tensions with Ukraine. President Vladimir Putin will visit annexed Crimea on Friday, amid concerns that a peace plan agreed last year could unravel.
Ukrainian assets remain under pressure, with the hyrvnia losing 0.16 percent to hit its weakest level in three-months, although bonds were slightly up on Friday after selling off over one cent across the curve on Thursday.
The Polish zloty gave up 0.2 percent against the euro whilst the Hungarian forint softened 0.1 percent.
Mongolia’s tugrik firmed 0.4 percent against the dollar after the central bank raised its benchmark rate by 4.5 percentage points to 15 percent on Thursday. The tugrik has lost 9 percent so far in August, making it the world’s poorest performing currency.
Zambia’s bonds continued to rally, with the 2024 dollar denominated issue up 0.2 cents to 98 cents in the dollar, its highest level since July 2015.
President Edgar Lungu said on Thursday he would take action to boost the economy and control spending, shrugging off an opposition challenge to his re-election.
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
Morgan Stanley Emrg Mkt Indx 908.89 -7.51 -0.82 +14.45
Czech Rep 846.85 -4.13 -0.49 -11.45
Poland 1802.28 -18.73 -1.03 -3.06
Hungary 27545.31 -154.81 -0.56 +15.15
Romania 6899.02 +0.44 +0.01 -1.50
Greece 569.77 -2.48 -0.43 -9.75
Russia 966.30 -8.74 -0.90 +27.64
South Africa 46240.65 +177.02 +0.38 +0.97
Turkey 77519.49 -451.44 -0.58 +8.08
China 3108.72 +4.61 +0.15 -12.16
India 28073.23 -50.21 -0.18 +7.49
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.02 27.01 -0.04 -0.08
Poland 4.29 4.29 -0.05 -0.79
Hungary 310.47 310.12 -0.11 +1.34
Romania 4.47 4.47 +0.06 +1.19
Serbia 123.31 123.20 -0.09 -1.49
Russia 64.01 63.59 -0.65 +13.96
Kazakhstan 338.39 338.56 +0.05 +0.62
Ukraine 25.21 25.17 -0.16 -4.99
South Africa 13.52 13.36 -1.18 +14.34
Kenya 101.27 101.20 -0.07 +0.92
Israel 3.77 3.76 -0.22 +3.08
Turkey 2.94 2.93 -0.52 -0.85
China 6.65 6.63 -0.32 -2.39
India 66.96 66.82 -0.22 -1.14
Brazil 3.24 3.24 +0.00 +22.26
Mexico 18.39 18.18 -1.15 -6.65
Debt Index Strip Spd Chg %Rtn Index
Sov’gn Debt EMBIG 358 -1 .02 7 70.86 1
Editing by Janet Lawrence