February 12, 2018 / 9:38 AM / 2 months ago

EMERGING MARKETS-Emerging stocks bounce, S.Africa firms as Zuma's fate weighed

LONDON, Feb 12 (Reuters) - Emerging stocks bounced off 1-1/2 month lows on Monday, snapping a seven-day losing streak as developed equity markets steadied, while South African markets gained ahead of a meeting set to decide President Jacob Zuma’s fate.

MSCI’s benchmark emerging equities index lost more than 7 percent last week, its worst performance since September 2011, ensnared in a global equities rout triggered by fears over rising U.S. inflation.

But the emerging index started the new week on a more stable footing, up 0.8 percent, with most individual bourses in positive territory after Wall Street ended the week on a stronger note on Friday .

“It’s a broad-based rebound of risk appetite,” said Guillaume Tresca, an emerging markets strategist at Credit Agricole. “Fundamentals in emerging markets are still quite good, growth is okay, FX reserves are fine, corporate earnings are fine, so we are not super-worried by the sell off.”

Asian markets set the tone with Chinese mainland shares up 1.3 percent and South Korean stocks up 0.9 percent. Emerging Europe also opened stronger, with Polish and Hungarian shares bouncing 1.6-1.8 percent and Turkish stocks up 1.1 percent.

South African stocks chalked up some tentative gains and the rand firmed 0.4 percent ahead of a meeting at which the ruling African National Congress (ANC) party will determine Zuma’s fate.

“It’s positive but we have this feeling that most of the positive news has been priced in,” said Tresca, adding Credit Agricole was slightly negative on the rand in the short-to-medium term as it would not be easy to present a tough budget.

“The business model is completely broken in South Africa. You need to change the whole country and it will take time. The bar is set high for (ANC leader and Deputy President Cyril) Ramaphosa,” Tresca said.

The average yield spread of South African sovereign dollar bonds over U.S. Treasuries on the JPMorgan EMBI Global index narrowed by 7 basis points (bps) to 239 bps and five-year credit default swaps fell 4 bps from Friday’s close to 159 bps. Local benchmark 10-year bond yields, which had topped 9.5 percent in November - fell to 8.4 percent.

The Russian rouble gained 0.7 percent, helped by oil prices rallying 2.2 percent. Russia’s central bank trimmed its key interest rate by 25 basis points on Friday to 7.5 percent, as expected, after inflation hit a record low.

With the dollar weakening 0.3 percent against a basket of currencies, Turkey’s lira and Mexico’s peso firmed around 0.3-0.4 percent.

China’s yuan was an underperformer, weakening 0.5 percent after recording its ninth straight weekly gain, its longest winning streak since early 2013.

Recent strength in the yuan has sparked speculation that the Chinese central bank could reinstate the “counter-cyclical” factor, a discretionary factor it introduced into the yuan midpoint formula last year to contain the currency’s decline.

For GRAPHIC on emerging market FX performance 2018, see tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2018, see tmsnrt.rs/2dZbdP5

For TOP NEWS across emerging markets

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

on year

Morgan Stanley Emrg Mkt Indx 1151.74 +8.89 +0.78 -0.58

Czech Rep 1114.16 +8.10 +0.73 +3.34

Poland 2420.68 +37.89 +1.59 -1.65

Hungary 38940.36 +620.04 +1.62 -1.11

Romania 8120.55 +118.00 +1.47 +4.73

Greece 842.49 +13.71 +1.65 +5.00

Russia 1206.02 +20.23 +1.71 +4.47

South Africa 49461.38 +173.93 +0.35 -5.85

Turkey 14996.34 +1406.07 +1.24 -0.29

China 3153.56 +23.71 +0.76 -4.64

India 34251.05 +245.29 +0.72 +0.57

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2018

Czech Rep 25.36 25.36 +0.02 +0.68

Poland 4.18 4.18 -0.03 -0.19

Hungary 312.15 311.73 -0.13 -0.52

Romania 4.65 4.65 +0.10 +0.59

Serbia 118.36 118.40 +0.03 +0.03

Russia 57.90 58.33 +0.74 -0.42

Kazakhstan 326.11 327.47 +0.42 +2.05

Ukraine 26.83 27.02 +0.71 +4.90

South Africa 11.95 12.03 +0.65 +3.39

Kenya 100.80 100.70 -0.10 +2.28

Israel 3.52 3.51 -0.16 -1.20

Turkey 3.81 3.82 +0.28 -0.58

China 6.33 6.30 -0.51 +2.80

India 64.30 64.37 +0.11 -0.73

Brazil 3.29 3.29 -0.03 +0.52

Mexico 18.63 18.70 +0.35 +5.44

Debt Index Strip Spd Chg %Rtn Index

Sov’gn Debt EMBIG 314 -6 .00 7 86.30 1

All data taken from Reuters at 09:00 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

Reporting by Claire Milhench; Editing by Gareth Jones

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