LONDON May 18 Rising uncertainty over U.S.
President Donald Trump's future slammed emerging markets on
Thursday, with equities down almost 1 percent and Brazilian
assets taking an additional hit from an escalation in local
MSCI's emerging market equity benchmark fell for a
second straight day and Russian dollar-denominated stocks
chalked up some of the biggest losses with a drop of 1.6
Developing stocks took their cue from Wall Street, where the
Dow and S&P 500 both tumbled 1.8 percent overnight
following reports that Trump tried to interfere with a federal
investigation, throwing doubt over his pro-growth policies and
raising the possibility he may be forced to quit the presidency.
An exclusive Reuters report detailing interactions between
major players in Trump's campaign and Russian officials is
continuing to roil markets. nL2N1IJ0UK]
Emerging currencies got a drubbing, with South Africa's rand
, Turkey's lira and Mexico's peso all also
weakening for a second straight session, slipping as much as 2
percent against the dollar. Yields on local benchmark bonds in
Turkey and South Africa hit the highest
since the end of April.
"We are seeing a classic rise in global uncertainty with
risk assets being out of favour and positions being closed on
some of the most risky emerging markets such as Turkey and South
Africa," Credit Agricole's head of emerging market strategy
Sebastian Barbe said.
"We have been advising clients to be a bit cautious, even
before the Trump issues, because volatility was low, good news
had been priced in and protectionist fears had already receded."
The rouble weakened nearly 1 percent in its third
straight session of losses as falling oil prices also
Meanwhile, a Brazilian media report implicated President
Michel Temer in a corruption scandal that could derail
investors' huge appetite for the country's assets.
Newspaper O Globo reported that Temer gave his blessing to
an attempt to pay a potential witness to remain silent in the
country's biggest-ever graft investigation, according to
plea-bargain testimony from a powerful businessman.
"This is not just the usual political noise that's spreading
to markets, it can impact the ability of the government to
finalise reforms which are necessary for appetite of investors
to continue," Barbe said.
The London-listed iShares MSCI Brazil tumbled more
than 12 percent, though the real remained unchanged
against the dollar.
Emerging equities have risen 15 percent so far this year and
emerging bond returns are among the best in the world but
AllianzGlobal Investors' head of emerging debt, Greg Saichin,
said this appeared in peril.
"We have had 21 weeks of inflows into the asset class
turning it into a more crowded trade," Saichin said. "If there
would be a pain event of any sort you have enough flows that
could reverse this happy state of affairs."
For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2017, 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 998.21 -10.42 -1.03 +15.77
Czech Rep 1010.26 -10.38 -1.02 +9.62
Poland 2267.94 -34.27 -1.49 +16.43
Hungary 34045.32 -101.17 -0.30 +6.38
Romania 8424.48 -32.13 -0.38 +18.91
Greece 779.96 -9.12 -1.16 +21.18
Russia 1078.21 -26.09 -2.36 -6.43
South Africa 47836.72 +332.65 +0.70 +8.96
Turkey 95015.45 -709.50 -0.74 +21.60
China 3090.40 -14.04 -0.45 -0.43
India 30528.07 -130.70 -0.43 +14.65
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.64 26.49 -0.56 +1.37
Poland 4.22 4.19 -0.72 +4.34
Hungary 309.88 308.75 -0.36 -0.34
Romania 4.57 4.57 -0.05 -0.73
Serbia 123.02 123.03 +0.01 +0.27
Russia 57.61 57.07 -0.93 +6.35
Kazakhstan 313.57 313.32 -0.08 +6.40
Ukraine 26.39 26.40 +0.04 +2.31
South Africa 13.48 13.20 -2.13 +1.83
Kenya 103.20 103.25 +0.05 -0.80
Israel 3.61 3.61 -0.05 +6.67
Turkey 3.63 3.57 -1.74 -2.85
China 6.89 6.88 -0.18 +0.77
India 64.55 64.12 -0.67 +5.26
Brazil 3.14 3.14 +0.04 +3.72
Mexico 19.10 18.78 -1.67 +8.47
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 328 3 .09 7 83.03 1
All data taken from Reuters at 09:18 GMT.
Currency percent change calculated from the daily U.S. close at
(Additional reporting by Sujata Rao; Editing by Louise Ireland)