LONDON, Dec 6 (Reuters) - Emerging equities tumbled to near two-month lows on Wednesday as geopolitical concerns over North Korea and the Middle East soured risk sentiment and investors continued a rotation out of tech stocks, hitting index heavyweights in Asia.
MSCI’s benchmark emerging stocks index fell 1.6 percent to its lowest level since early October in a broad-based pull-back that spread from Asia to emerging Europe.
Tech stocks led markets lower, with MSCI’s emerging market tech index down over 2 percent to a two-month low. Hong Kong stocks fell over 2 percent, their biggest single-day loss in over a year, following a 2.6 percent pull back in index heavyweight Tencent.
But risk aversion was also fuelled by simmering tensions in the Korean peninsula, with North Korea denouncing a large scale joint aerial drill by the United States and South Korea.
South Korea shares fell 1.4 percent to a two-week low and Taiwan slipped 1.6 percent.
Shanghai stocks also headed towards a near four-month trough after the director general of the People’s Bank of China research institute stoked fears of tightening.
Moves by the U.S. to recognise Jerusalem as the capital of Israel, despite Middle East allies including Saudi Arabia and Turkey warning of dangerous repercussions, added to investor concerns.
Israel’s shekel weakened 0.4 percent against the dollar to a two-week low.
“The risk is that it will lead to demonstrations in and around Jerusalem which could turn into clashes,” said Inan Demir, senior emerging economist at Nomura International.
“In the coming few days this can put the Israeli shekel under pressure, but we will have to see how things evolve. It has certainly become a very important risk factor for the region.”
Qatar stocks led the fallers in the Gulf, tumbling over 2 percent at one point, in their worst one-day plunge since the start of July.
The market had surged earlier this week on hopes a GCC summit could help mend a diplomatic rift between Qatar and its neighbours but Saudi, Bahrain and the United Arab Emirates boycotted the meeting.
Elsewhere, the South African rand slipped 0.7 percent against the dollar after recent strong performance on bets that deputy President Cyril Ramaphosa would triumph in the leadership battle for the ruling ANC party.
South African stocks also fell 1.6 percent to 1-1/2 month lows after dual-listed furniture retailer Steinhoff International tumbled 21 percent as an accounting irregularity probe was launched and its chief executive resigned.
The Turkish lira was 0.3 percent weaker and Turkish banks slipped almost 1 percent as a U.S. trial of a Turkish Halkbank executive continued.
Deputy Prime Minister Mehmet Simsek said the U.S. Treasury had requested information on one Turkish bank but Demir said this did not change the overall picture as the market was mainly concerned about fines on one bank.
Instead he said the focus was shifting to the Dec. 14 Turkish central bank meeting at which a rate hike is expected to help tackle rising inflation.
The Indian rupiah fell 0.2 percent with the central bank meeting holding rates at 6 percent as expected , after inflation accelerated to a seven-month high.
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For RUSSIAN market report, see) Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg
Morgan Stanley Emrg Mkt Indx 1100.36 -17.33 -1.55 +27.61
Czech Rep 1054.39 -6.50 -0.61 +14.41
Poland 2390.63 -17.09 -0.71 +22.73
Hungary 37810.15 +251.39 +0.67 +18.15
Romania 7731.40 +11.23 +0.15 +9.12
Greece 731.61 +1.18 +0.16 +13.67
Russia 1129.30 -4.95 -0.44 -2.00
South Africa 51560.90 -851.61 -1.62 +17.45
Turkey 05985.07 -274.92 -0.26 +35.64
China 3294.13 -9.55 -0.29 +6.14
India 32587.65 -214.79 -0.65 +22.39
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 25.68 25.64 -0.16 +5.19
Poland 4.21 4.21 -0.17 +4.51
Hungary 314.42 314.00 -0.13 -1.78
Romania 4.63 4.63 -0.04 -2.02
Serbia 119.43 119.35 -0.07 +3.28
Russia 59.03 58.71 -0.54 +3.79
Kazakhstan 333.76 333.16 -0.18 -0.03
Ukraine 27.10 27.10 +0.00 -0.37
South Africa 13.52 13.44 -0.64 +1.54
Kenya 102.75 103.00 +0.24 -0.37
Israel 3.52 3.50 -0.37 +9.50
Turkey 3.85 3.84 -0.26 -8.48
China 6.61 6.62 +0.06 +4.99
India 64.46 64.35 -0.17 +5.41
Brazil 3.24 3.24 +0.00 +0.36
Mexico 18.74 18.75 +0.07 +10.54
Debt Index Strip Spd Chg %Rtn Index
Sov’gn Debt EMBIG 315 2 .06 8 05.27 1
All data taken from Reuters at 10:00 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT. (Reporting by Claire Milhench; Editing by Raissa Kasolowsky)