| LONDON, March 22
LONDON, March 22 Emerging assets slipped on
Wednesday after a slide on Wall Street, with stocks snapping an
eight-day winning streak, though the South African rand briefly
firmed after data showed a narrower current account gap.
MSCI's emerging equity index retreated almost 1 percent
after its longest streak of gains since last August,
hit by losses on U.S. stocks as doubts grew about President
Donald Trump's ability to implement spending and tax cut pledges
that were aimed at accelerating economic growth.
While the dollar and U.S. Treasuries also slipped, emerging
currencies were broadly weaker, especially in Asia, while
emerging sovereign dollar bond yield spreads widened four basis
points to 310 bps over Treasuries, the widest in a week
The rand firmed as much as 0.4 percent to the dollar after
data showed South Africa's current account deficit narrowed to
just 1.7 percent of GDP towards end-2016, and annual inflation
slowed. The rand later ceded the gains.
Benchmark government bond yields slipped to eight-month lows
"The rand has been supported by the commodity rally. Partly
that's the reason why CPI came in a bit lower – because the rand
is stronger than expected," SEB analyst Per Hammarlund said,
attributing the current account improvement also to stronger
commodity exports and weak domestic demand.
"I don't think it has really turned a corner – it's not a
structural improvement in South Africa, it's more the commodity
cycle that it's gaining from right now."
Russian bond yields meanwhile inched off three-year lows
, stocks fell 0.5 percent and the rouble slipped from
five-week highs before this Friday's central bank
meeting that is likely to hold interest rates at 10 percent.
Fifteen of 25 analysts polled by Reuters predict an on-hold
decision, despite easing inflation and fresh data that showed
anaemic wage growth and falling retail sales.
Most other emerging European currencies retreated, mirroring
earlier weakness in Asia. Analysts at ING warned that emerging
markets may not benefit from the latest declines in dollar and
"Currently declining Treasury yields are challenging for EM
currencies as this is caused by uncertainty about the U.S growth
outlook (and thus global growth)," they wrote.
Focus in central Europe was on a Czech bond auction that is
likely to be heavily bid as investors pile into
crown-denominated assets before the expected removal of an
exchange rate cap. Foreigners hold around 40 percent of Czech
bonds, double year-ago levels, hoping to capitalise on a firmer
The crown eased slightly in three-month forward markets
after Tuesday's renewed surge to three-year highs against the
Hammarlund said forwards trade had effectively dried up
because "the left-hand side has gone ... There might be some
price but there's no one trading it anymore as no one wants to
take the other side of the bet."
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 963.63 -9.45 -0.97 +11.76
Czech Rep 973.60 -9.12 -0.93 +5.64
Poland 2216.73 -35.84 -1.59 +13.80
Hungary 31758.59 -285.54 -0.89 -0.76
Romania 7952.52 -22.40 -0.28 +12.24
Greece 637.04 -3.38 -0.53 -1.03
Russia 1107.84 -13.79 -1.23 -3.86
South Africa 44766.46 -741.21 -1.63 +1.97
Turkey 89506.34 -1100.12 -1.21 +14.55
China 3245.45 -16.16 -0.50 +4.57
India 29252.55 -232.90 -0.79 +9.86
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.02 27.02 -0.01 -0.05
Poland 4.28 4.28 -0.05 +2.96
Hungary 308.43 308.40 -0.01 +0.13
Romania 4.56 4.56 -0.09 -0.55
Serbia 123.85 123.86 +0.01 -0.40
Russia 57.86 57.68 -0.30 +5.88
Kazakhstan 315.48 315.48 +0.00 +5.76
Ukraine 26.90 26.86 -0.15 +0.37
South Africa 12.67 12.67 +0.04 +8.41
Kenya 102.90 103.00 +0.10 -0.52
Israel 3.65 3.63 -0.39 +5.61
Turkey 3.64 3.63 -0.27 -3.16
China 6.89 6.88 -0.04 +0.83
India 65.50 65.31 -0.29 +3.74
Brazil 3.09 3.09 -0.01 +5.35
Mexico 19.23 19.10 -0.70 +7.71
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 335 5 .02 7 65.33 1
All data taken from Reuters at 09:12 GMT.
Currency percent change calculated from the daily U.S.
close at 2130 GMT.
(Additional reporting by Claire Milhench; Editing by Tom