| LONDON, June 12
LONDON, June 12 Emerging stocks fell to one-week
lows on Monday after Friday's sell-off in U.S. technology shares
hammered Asian electronics firms, while Qatari assets stabilised
as Kuwait tried to mediate in the diplomatic crisis in the
MSCI's benchmark emerging market stocks index fell
almost 1 percent after some of the big Asian manufacturers
tumbled in the wake of a sharp slide in U.S. tech giants Amazon
, Apple and Facebook on Friday.
South Korea's Samsung Electronics lost 1.5
percent and Taiwan Semiconductor Manufacturing Co fell
2.1 percent, moves reflected in the broader indices.
The Korean bourse fell 1 percent, Taiwan
fell 0.9 percent and Hong Kong slipped 1.2 percent. China's
Shanghai Composite also fell 0.6 percent. Electronics
shipments have led an export revival for many of Asia's
The Korean won weakened 0.5 percent to three-week
lows after the central bank chief said the bank would maintain
its record low interest rate of 1.25 percent.
Emerging Europe also opened lower with Polish shares
leading the fallers, down over 1 percent, while the
zloty underperformed its eastern European peers
against the euro, down around 0.2 percent.
The European Union has lifted visas for Ukrainians, a move
that could lead to tightening in the Polish labour market where
nearly a million Ukrainians work.
Guillaume Tresca, senior emerging market strategist at
Credit Agricole, said markets were awaiting this week's U.S.
Federal Reserve meeting, at which it is expected to raise
"The rate hike is priced in. The question will be about the
next hike and the tapering of the balance sheet," he said.
If the Fed hints it is ready to hike faster than previously
anticipated, it could trigger a correction in emerging markets,
which have benefited from stong inflows this year, Tresca said.
The average yield spread of emerging market bonds over U.S.
Treasuries on the JPMorgan Global Diversified index
is around 298 basis points, a one-month low.
Qatari assets stabilised on hopes that the Middle East's
diplomatic crisis will be resolved, as Kuwait tried to mediate.
Qatar's neighbours cut diplomatic ties and
transport links last week.
Qatari stocks rose 0.2 percent after dipping to their lowest
level since January 2016 last week and ending the week down 7
percent, their worst performance since December 2014.
Qatar's 2026 dollar-denominated eurobond
edged up 0.5 cents off multi-month lows whilst five-year credit
default swaps narrowed 1 basis point from Friday's close to 107
bps, according to IHS Markit data.
Qatar's finance minister said the state could easily defend
its economy and currency against sanctions,
although the riyal remains under pressure against the dollar in
the one-year forwards market.
The one-year forward rate stands at around 545 points
after blowing out to 630 points last week, the highest
since December 2015. Dollar shortages hit Qatar
exchange houses on Sunday, as foreign banks scaled back business
with Qatar institutions.
"Given the uncertainty around the likelihood of a short-term
convergence of diplomatic views, and the impact of the current
sanctions on the capital flow dynamics in Qatar, we maintain a
more cautious view on the sovereign curve," analysts at Citi
said in a note, adding the bank is underweight Qatar bonds.
The Turkish lira strengthened 0.5 percent against the dollar
and stocks gained 0.4 percent after data showing the
Turkish economy grew 5 percent in the first quarter, beating
forecasts. The current account deficit also came in
lower than forecast.
"Today's figures make it more likely that the central bank
will resist pressure from the government to lower interest
rates," analysts at Capital Economics said in a note.
The South African rand firmed 0.4 percent after
Moody's downgraded the country's credit rating but kept it at
investment grade on Friday. Moody's is the only
major agency to rate South Africa investment grade (IG).
"It's not a gamechanger, they are still one notch above S&P
and Fitch," said Tresca. "You just need one IG rating to remain
in the main bond indexes. So far it's OK ... but if they
downgrade further it would have big implications, leading to
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 1008.36 -9.83 -0.97 +16.94
Czech Rep 1006.76 -1.40 -0.14 +9.24
Poland 2305.32 -25.40 -1.09 +18.35
Hungary 35200.68 -210.33 -0.59 +9.99
Romania 8474.99 -40.41 -0.47 +19.62
Greece 778.83 -3.27 -0.42 +21.00
Russia 1041.49 +2.99 +0.29 -9.62
South Africa 45267.26 -606.96 -1.32 +3.11
Turkey 99325.49 +382.61 +0.39 +27.11
China 3140.45 -17.95 -0.57 +1.19
India 31076.76 -185.30 -0.59 +16.71
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.20 26.17 -0.08 +3.10
Poland 4.19 4.18 -0.14 +5.09
Hungary 307.37 307.20 -0.06 +0.47
Romania 4.56 4.56 -0.06 -0.58
Serbia 122.34 122.25 -0.07 +0.83
Russia 57.14 57.02 -0.22 +7.21
Kazakhstan 316.48 315.68 -0.25 +5.43
Ukraine 26.06 26.14 +0.31 +3.61
South Africa 12.89 12.94 +0.45 +6.56
Kenya 103.25 103.30 +0.05 -0.85
Israel 3.53 3.53 -0.11 +9.02
Turkey 3.52 3.54 +0.46 +0.19
China 6.80 6.80 -0.01 +2.14
India 64.39 64.24 -0.23 +5.53
Brazil 3.30 3.30 +0.00 -1.30
Mexico 18.20 18.16 -0.21 +13.81
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 317 0 .04 7 90.61 1
(Editing by Robin Pomeroy)