LONDON, Nov 28 (Reuters) - Emerging equities edged up off one-week lows on Tuesday as Chinese mainland markets steadied after heavy falls in the previous session, whilst the Turkish lira continued to underperform.
MSCI’s benchmark emerging stocks index rose 0.2 percent after China’s blue chip index climbed off three-week lows hit on Monday and the Shanghai Composite rose 0.3 percent off three-month lows.
Chinese markets had sold off hard on Monday, tumbling between 0.9-1.3 percent, extending last week’s losses.
Investor confidence in China has been dented by rising bond yields and authorities’ efforts to crack down on leverage, with higher borrowing costs threatening to squeeze corporate profits.
“The market has been reacting to more strident language in China around the leveraging. That should cause growth to slow,” said Per Hammarlund, chief emerging markets strategist at SEB.
“Everybody still believes they will be pretty careful not to de-lever too fast but the fact that they are taking a tougher line now is weighing on stocks in China in particular.”
Hong Kong stocks found a floor, trading flat, and South Korean stocks rose 0.25 percent after big falls in tech shares on Monday. But Taiwan shares still closed down 0.4 percent at one-week lows.
Hammarlund said investors were awaiting factory activity data due on Friday to see how growth momentum is holding up across emerging markets.
“The consensus seems to be it will be a very marginal slowdown (in China) ... It seems as if the rhetoric will start first, then the harder actions will come later. They need to prepare the ground a bit first,” he said.
In currencies the Turkish lira continued to underperform its peers, falling 0.5 percent against the dollar. The currency plumbed record lows last week, impacted by diplomatic tensions with the United States and worries about the independence of its central bank.
In the U.S. court case that has strained relations between the two countries, a Turkish gold trader will now not stand trial on charges of conspiring to evade U.S. sanctions against Iran, but a Halkbank executive will still do so.
Turkey’s economic confidence index fell to 97.9 points in November, retreating further from a five-year high in August.
The South African rand was a touch weaker, but still trading near a five-week high hit in the previous session after the country dodged a double downgrade of its debt.
South Africa’s President Jacob Zuma called for concrete efforts to boost growth after S&P Global cut the country’s local currency debt to junk, whilst Moody’s placed it on review for a downgrade.
Hammarlund said the rand’s bounce was likely to be temporary: “It outperformed yesterday on relief that Moody’s didn’t downgrade. But they postponed it – they will never say South Africa is completely out of the woods. It’s still on a negative outlook,” he said.
The Russian rouble firmed 0.25 percent on the last day of a monthly tax payment period that usually prompts export-focused companies to sell dollars in order to meet local duties.
But Russian stock markets declined between 0.7-0.9 percent, following the oil price down. Investors are awaiting a meeting of oil producers in Vienna this week to see whether a deal to curb crude output is likely to be extended.
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
Morgan Stanley Emrg Mkt Indx 1146.26 +1.93 +0.17 +32.94
Czech Rep 1049.19 -0.62 -0.06 +13.84
Poland 2481.80 -15.35 -0.61 +27.41
Hungary 39266.06 -158.23 -0.40 +22.69
Romania 7755.23 +17.59 +0.23 +9.46
Greece 729.66 +5.27 +0.73 +13.36
Russia 1149.56 -11.00 -0.95 -0.24
South Africa 53716.35 -94.62 -0.18 +22.36
Turkey 04381.58 -378.16 -0.36 +33.59
China 3333.66 +11.43 +0.34 +7.41
India 33599.39 -125.05 -0.37 +26.19
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 25.42 25.44 +0.05 +6.23
Poland 4.20 4.21 +0.02 +4.75
Hungary 311.34 310.81 -0.17 -0.81
Romania 4.64 4.64 -0.14 -2.35
Serbia 119.59 119.31 -0.23 +3.14
Russia 58.35 58.49 +0.25 +5.00
Kazakhstan 331.66 330.90 -0.23 +0.60
Ukraine 26.88 26.81 -0.26 +0.45
South Africa 13.77 13.75 -0.14 -0.28
Kenya 103.25 103.30 +0.05 -0.85
Israel 3.50 3.50 -0.03 +10.05
Turkey 3.93 3.91 -0.53 -10.18
China 6.59 6.60 +0.04 +5.29
India 64.46 64.47 +0.02 +5.40
Brazil 3.23 3.23 +0.00 +0.79
Mexico 18.59 18.58 -0.07 +11.41
Debt Index Strip Spd Chg %Rtn Index
Sov‘gn Debt EMBIG 315 -1 .00 8 04.66 1
All data taken from Reuters at 09:38 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.
Reporting and graphic by Claire Milhench