February 26, 2020 / 10:02 AM / a month ago

EMERGING MARKETS-EM stocks, FX reel under coronavirus pressure; S.Africa budget eyed

* Shanghai blue-chips, South Korea shares down more than 1%

* Philippines tumbles almost 4%

* South African rand at near 5-month low ahead of budget

* Currencies in India, Malaysia buck the gloom

By Susan Mathew

Feb 26 (Reuters) - Emerging market stocks hit their lowest in 12 weeks on Wednesday and most currencies also traded in the red as coronavirus cases surged, while South Africa’s rand weakened ahead of a budget review.

Bourses in Asia were well in the red, with Chinese blue-chips and South Korea’s Kospi index both down more than 1%, while Philippine shares, back after a day’s holiday, tumbled nearly 4%.

MSCI’s index of emerging market shares lost 1%, as a 2% slump in South African shares and an 11-week low for Russia’s main index, down 1.2%, added to the declines.

The moves were in line with an overnight drop on Wall Street and a lower open in Europe, after the U.S. Centers for Disease Control issued a warning to citizens to prepare for the virus saying it was no longer a question of if, but when, the virus would become a pandemic.

As it spreads to more countries, China, South Korea, Italy and Iran all reported a rise in the number of new cases, taking the number to about 80,000 globally, with the death toll also on the rise.

“We are waking up to the downside of the virus and it will be key to keep an eye on spread,” said Trieu Pham, emerging market debt strategist at ING.

“(The virus) has shaken up markets that were too complacent, partly due to the availability of easy money as central banks adopted dovish stances, especially since last year.”

South Africa’s rand stayed at near five-month lows ahead of Finance Minister Toto Mboweni’s budget speech after the medium term budget in October had prompted Moody’s to warn a downgrade to ‘junk’ which would see the country lose its last investment rate grading.

The country’s National Treasury will try to trim its swollen budget deficit by raising revenue through personal income and excise tax hikes, a Reuters poll found. The budget is due at 1200 GMT.

Cristian Maggio, head of emerging markets strategy at TD Securities said he does not expect a change in fiscal projections enough to spare a Moody’s downgrade, adding that in the absence of any material revision, the rand will be weaker.

Russia’s rouble fell half a percent, hovering at near six-month lows, while Turkey’s lira was at levels not seen since May last year, with both countries still in tense conflict over the Syrian war - an issue that has consistently added to the lira woes.

Brazil markets, set to reopen on Wednesday after a long weekend, are seen tumbling as they catch up with the virus-fuelled rout this week that has wiped $3 trillion off MSCI’s world index.

Frankfurt-listed depository receipts of Brazilian oil firm Petroleo Brasileiro, planemaker Embraer and lender Itau Unibanco lost between 2.6% and 6% amid a report here of the country's first case of the virus.

Malaysia’s ringgit and the Indian rupee were notable exceptions to the gloom, up 0.2% each.

As investors kept a close eye on the political turmoil in Malaysia set-off by a surprise resignation of Prime Minister Mahathir Mohamad, sentiment got a slight lift after he said a postponed economic stimulus package will be unveiled soon.

For GRAPHIC on emerging market FX performance 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2020, see tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru;)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below