LONDON Feb 28 Emerging stocks fell to one-week
lows on Tuesday, while currencies firmed marginally ahead of a
widely-anticipated speech by U.S. President Donald Trump,
although both asset classes were on track for hefty monthly
Markets worldwide are on tenterhooks before Trump's first
Congressional address, where he could provide detail on his
spending and tax reform plans and may also accuse countries,
especially China, of currency manipulation.
Lack of action so far on these issues has kept the dollar
subdued and unleashed stock market bulls - MSCI's emerging
equity index hit 19-month highs with 10 percent year-to-date
gains at one point.
While the index is set for a second month of gains, some
investors have retreated in the run-up to Trump speech.
"If our worst fears are confirmed (on protectionism) you can
expect quite a correction in emerging markets," said Maarten-Jan
Bakkum, investment strategist at NN Investment Partners who is
neutral on emerging equities.
"Since the (Trump) inauguration, markets have priced out
some of the protectionism risks...people are impatient to play
the emerging markets theme as (economic) data has been so good."
Emerging equity funds have received $6.5 billion this year,
and funds dedicated to Brazil and Russia have led inflows to
country-specific emerging equity vehicles, according to data
from Bank of America Merrill Lynch.
These flows have allowed emerging currencies to firm against
the dollar, with the Russian rouble up 4 percent in its third
month of gains, lifted also by robust oil prices.
The lira enjoyed its first month of gains since August
, as Turkey's central bank raised funding rates to 10.5
Currencies in Asia, the region most vulnerable to greater
U.S. protectionism, drifted off multi-month highs
The Indian rupee moved further off three-month highs before
1200 GMT data that is likely to show economic growth slowed to a
three-year low of 6.4 percent in the Oct-Dec 2016 quarter due to
a sweeping currency reform exercise.
In central Europe, Hungarian shares were the biggest movers
with a 1.2 percent fall, led by a 3 percent decline in
oil firm MOL which posted lower fourth quarter profits
. The index may close in the red after four months
of gains, having hit successive record highs.
The forint was flat against the euro before a
central bank meeting that is expected to hold rates at 0.9
percent, despite rising inflation. ING Bank
analysts said, however, this would not undermine the forint
which remains close to recent five-week highs around 306.6 per
"The (central bank) seems to be determined to keep monetary
policy loose and should look through rising domestic inflation,"
ING told clients, noting Hungarian bond inflows thanks to robust
risk appetite and the recent fall in German two-year yields.
"As both factors seem to be still in place, a limited
euro/forint downtrend is likely to continue for a while yet.
Euro/forint to re-test the 307 level," they added.
One of the gloomy spots was Nigeria, which failed to devalue
the naira this month after raising expectations it was about to
do so. Latest data showed the economy contracted 1.5 percent
The naira slipped 1 percent in the six-month NDF market
after central bank dollar sales on Monday, which
banks offered on to retail clients at 375 per dollar - far
weaker than official 305 per dollar rates. But it firmed 2.2
percent to 450 per dollar on the black market on Tuesday, a more
than four-month high.
On bond markets, emerging sovereign dollar bonds' yield
premia over Treasuries was at two-week lows around 312 basis
points, having contracted 16 bps this month.
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 938.95 -1.37 -0.15 +8.89
Czech Rep 955.55 -3.06 -0.32 +3.68
Poland 2190.19 -20.07 -0.91 +12.44
Hungary 32539.50 -332.61 -1.01 +1.68
Romania 8026.17 +16.22 +0.20 +13.28
Greece 643.72 -1.65 -0.26 +0.01
Russia 1108.31 -8.98 -0.80 -3.82
South Africa 44198.12 -264.63 -0.60 +0.67
Turkey 87595.59 -169.82 -0.19 +12.10
China 3242.66 +14.00 +0.43 +4.48
India 28750.02 -62.86 -0.22 +7.98
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.02 27.01 -0.03 -0.04
Poland 4.32 4.31 -0.12 +2.03
Hungary 307.59 307.43 -0.05 +0.40
Romania 4.51 4.51 -0.02 +0.52
Serbia 123.72 123.82 +0.08 -0.30
Russia 57.96 58.11 +0.26 +5.70
Kazakhstan 312.79 311.79 -0.32 +6.67
Ukraine 27.18 27.04 -0.52 -0.66
South Africa 12.99 13.00 +0.09 +5.71
Kenya 103.05 103.25 +0.19 -0.66
Israel 3.67 3.66 -0.10 +4.96
Turkey 3.61 3.61 -0.12 -2.31
China 6.87 6.87 -0.03 +1.07
India 66.74 66.69 -0.07 +1.81
Brazil 3.11 3.11 -0.00 +4.65
Mexico 19.94 19.90 -0.21 +3.89
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 334 -3 .02 7 65.03 1
All data taken from Reuters at 09:51 GMT.
Currency percent change calculated from the daily U.S.
close at 2130 GMT.
(Editing by Alexander Smith)