LONDON Dec 20 Emerging equities slid to a
one-month low on Tuesday but Turkey's lira and dollar bonds
recovered the losses they incurred on Monday after the Russian
ambassador was killed in an attack in the Turkish capital
The Turkish lira rebounded 0.7 percent against the
dollar after slipping 0.7 percent on Monday when an off-duty
policeman shot Russia's ambassador to Turkey, Andrei Karlov, at
an art gallery. Turkish police have detained six people in
connection with the killing.
Both Russia and Turkey pledged the need for more efforts to
"fight terrorism" after the shooting, with the Russian, Turkish
and Iranian foreign ministers due to meet in Moscow to discuss
the crisis in Syria.
"There is some relief there has not been an escalation of
tensions, unlike what we saw last year with the downing of the
Russian plane," said Manik Narain, emerging FX strategist at
"In the medium term it could introduce some downside to
expectations of a rebound in Russian tourism next year but for
now markets see the risks as contained," he said, adding that
an easing in U.S. Treasury yields had helped.
The yield premium paid by Turkish sovereign dollar bonds
over U.S. Treasuries on the JPMorgan EMBI Global Diversified
index narrowed by 3 basis points (bps) to 365 bps after widening
on Monday. Stocks slipped a touch after closing down
The market is awaiting a decision on interest rates by the
Turkish central bank. A Reuters poll showed a majority of
analysts expected a rate hike though some thought the bank might
"It's not entirely clear they perceive a need to tighten,"
Narain said. "The central bank has not been incrementally
tightening liquidity in recent weeks as the lira has weakened so
there is a risk they don't come up with a more hawkish intent."
Russia's rouble firmed 0.2 percent against the dollar
after gaining 0.3 percent on Monday. Moscow-listed rouble stocks
were up 0.25 percent, hovering below record highs hit
earlier in December.
MSCI's emerging equities index slipped 0.3 percent
to one-month lows in its fifth straight day of losses.
Emerging assets have been hit by guidance from the U.S.
Federal Reserve that it will tighten faster than previously
anticipated, with U.S. President-elect Donald Trump's
expansionary policies expected to fuel inflation.
Asian markets led the selling, with Chinese
stocks falling 0.5 percent after Beijing's moves
to tighten supervision of shadow banking activities.
China's yuan firmed but bonds remained weak with
yields at a 15-month high.
Asian currencies suffered with Malaysia's ringgit at
its weakest level against the dollar since January 1998.
In emerging Europe Polish stocks rose over 1
percent to their highest level since April 2016, whilst the
zloty firmed 0.2 percent against the euro.
Poland's lower chamber of parliament has removed a temporary
ban on access for the media after protests.
Hungary's forint was steady and bonds firmed ahead
of a central bank meeting at which rates are expected to remain
on hold at 0.9 percent. It is possible the bank will announce a
further cut in the three-month deposit facility.
Ukrainian dollar-denominated bonds rose across the curve
after the International Monetary Fund pledged support following
the government's decision to nationalise PrivatBank.
For GRAPHIC on emerging market FX performance 2016, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2016, see tmsnrt.rs/2dZbdP5
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
Emrg Mkt Indx 848.85 -2.28 -0.27 +6.89
Czech Rep 915.55 +3.09 +0.34 -4.26
Poland 1940.19 +15.52 +0.81 +4.36
Hungary 31676.40 +30.02 +0.09 +32.42
Romania 7005.04 -54.71 -0.77 +0.01
Greece 622.33 -5.58 -0.89 -1.43
Russia 1134.87 +4.81 +0.43 +49.91
South Africa 43535.83 +203.66 +0.47 -4.94
Turkey 77366.33 +208.53 +0.27 +7.86
China 3102.48 -15.61 -0.50 -12.34
India 26290.21 -84.49 -0.32 +0.66
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.00 27.00 +0.00 -0.01
Poland 4.41 4.42 +0.14 -3.51
Hungary 311.28 311.24 -0.01 +1.08
Romania 4.52 4.52 -0.01 +0.03
Serbia 123.46 123.57 +0.09 -1.61
Russia 61.69 61.85 +0.25 +18.25
Kazakhstan 335.10 335.12 +0.01 +1.61
Ukraine 26.40 26.24 -0.61 -9.27
South Africa 14.14 14.12 -0.14 +9.32
Kenya 102.23 102.20 -0.03 -0.03
Israel 3.86 3.86 +0.16 +0.84
Turkey 3.51 3.53 +0.67 -16.87
China 6.95 6.95 +0.05 -6.55
India 68.01 67.83 -0.26 -2.66
Brazil 3.36 3.36 +0.00 +17.68
Mexico 20.43 20.38 -0.25 -15.97
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 364 -4 .01 7 32.64 1
(Additional reporting by Sujata Rao; Editing by Catherine