LONDON Oct 13 The Turkish lira slid to a record
low, the South African rand lost over one percent and emerging
equities tumbled to three-week depths on Thursday after weak
Chinese data and Fed minutes that signalled a rate hike.
The Turkish lira lost 0.65 percent against the dollar
after the government signalled it would revive plans to push
through an executive presidential system.
"The return of the risk that (President Tayyip) Erdogan is
actually very much focused on his agenda of pursuing the
executive presidency ... is a negative," said Roxana Hulea, an
emerging markets strategist at Société Générale. She added that
this compounded concerns about democratic values in Turkey.
The yield premium paid by Turkish sovereign dollar bonds
over U.S. Treasuries also rose by 7 basis points
on the day (bps) to 319 bps, the highest in 10 days.
South Africa's volatile rand slipped again too,
losing over 1 percent against the dollar. South Africa's state
prosecutor said Finance Minister Pravin Gordhan could ask for a
review of a decision to charge him with fraud.
"That hasn't really reassured the market and it shows again
that the political side of things remains extremely uncertain
and volatile, hence the market is approaching (South Africa) in
a very cautious manner," said HSBC FX strategist Murat Toprak.
The uncertainty around the fate of Gordhan, who is popular
with investors, has sparked a sell-off in South African assets
this week, and the 10-year local government bond is
trading at around six-week lows.
South African five-year credit default swaps
rose 2 basis points (bps) on the day to 268 bps, according to
Markit data, the highest level since July 8. South African
dollar bond yields also stayed near three-month
Toprak said the market remained concerned about the possible
removal of Gordhan, which could hurt the country's credibility
ahead of a ratings review by Moody's, which recently downgraded
Turkey, in November. "There is a possibility the country could
be downgraded to below investment grade, which is obviously
putting pressure on the market," he said.
CAUTION FRAGILE CHINA
MSCI's benchmark emerging markets index fell 1.2
percent to its lowest level since mid-September, after data
showed China's September exports fell 10 percent year-on-year,
far more than expected, while imports shrank 1.9 percent.
The weak data soured sentiment and fuelled a broader
risk-off move, cemented by minutes from the U.S. Federal Reserve
that showed several voting policymakers judged a rate hike was
warranted "relatively soon" if the U.S. economy continued to
"Chinese trade data is a big factor - it suggests domestic
demand isn't as strong ... which has a knock-on effect on other
emerging markets," said William Jackson, senior emerging markets
economist at Capital Economics.
Chinese mainland stocks traded flat, but Hong Kong
shares sold off 1.6 percent to six-week lows, and Korea
stocks lost almost one percent to trade at three-week lows,
despite a rebound in Samsung shares of 1.4 percent.
After keeping its base rate unchanged at 1.25 percent, the
Bank of Korea warned that Samsung's smartphone crisis could
hamper economic growth. The won weakened 1.1
percent against the dollar to three-month lows.
China's data woes sent the yuan to a new six-year
low, reinforcing the view that the world's second largest
economy may pursue a weaker currency policy in coming months.
Oil producers' currencies also came under pressure following
a move lower in the oil price after a report from OPEC
pointing to a larger 2017 surplus despite the group's deal to
The Russian rouble weakened 0.3 percent against the
dollar and the Malaysian ringgit lost 0.6 percent to
trade at eight-month lows.
Polish assets led falls in Eastern Europe, with
stocks down almost one percent while the zloty
weakened 0.4 percent against the euro.
For GRAPHIC on emerging market FX performance 2016, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2016, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2016, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2016, see link.reuters.com/zyh97s
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 % %
Emrg Mkt Indx 892.77 -9.97 -1.10 +12.42
Czech Rep 889.71 -1.03 -0.12 -6.97
Poland 1744.39 -16.04 -0.91 -6.17
Hungary 28303.15 -93.72 -0.33 +18.32
Romania 6900.93 -18.46 -0.27 -1.48
Greece 579.61 -6.63 -1.13 -8.20
Russia 987.58 -8.38 -0.84 +30.45
South Africa 44559.07 -489.50 -1.09 -2.70
Turkey 76788.56 -672.70 -0.87 +7.06
China 3061.35 +2.85 +0.09 -13.50
India 27593.52 -488.82 -1.74 +5.65
Currencies Latest Prev Local
% change %
Czech Rep 27.02 27.01 -0.04 -0.07
Poland 4.31 4.29 -0.42 -1.16
Hungary 306.30 305.26 -0.34 +2.72
Romania 4.50 4.50 -0.10 +0.41
Serbia 123.01 123.04 +0.02 -1.25
Russia 63.27 63.09 -0.28 +15.30
Kazakhstan 330.80 330.65 -0.05 +2.93
Ukraine 25.79 25.79 +0.00 -7.13
South Africa 14.34 14.21 -0.88 +7.82
Kenya 101.20 101.20 +0.00 +0.99
Israel 3.81 3.81 +0.01 +1.93
Turkey 3.10 3.08 -0.51 -5.91
China 6.73 6.72 -0.16 -3.51
India 66.90 66.80 -0.15 -1.05
Brazil 3.20 3.20 +0.05 +23.75
Mexico 18.98 18.90 -0.42 -9.54
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 360 5 .00 7 65.96 1
(Additional reporting by Adela Suliman)