LONDON Oct 11 Emerging market stocks posted
their biggest daily losses in two weeks on Tuesday, led lower by
South Korea's Samsung, while South African assets were hammered
by news about the finance minister's legal difficulties.
The announcement that South African prosecutors had issued
Finance Minister Pravin Gordhan with a summons in relation to
the establishment of a tax department investigation unit a
decade ago sent the rand down more than 3 percent against
the dollar - its weakest in nearly four weeks.
Debt issued by Africa's most industrialised nation slipped
to multi-month lows, while the cost of insuring South Africa's
debt against default jumped to its highest in three months.
Gordhan, highly respected by financial markets, has been at
the centre of a power struggle in the ruling ANC party and his
stand-off with President Jacob Zuma has unnerved investors.
"The market is really afraid of the fact that Gordhan may be
sacked from the government by an investigation or some sort of
police or judicial act that would restrict his freedom or force
him to step down," said Cristian Maggio, head of emerging
markets strategy at TD Securities.
Gordhan stepping down would make it very likely the country
would lose its investment grade rating, Maggio said.
"I doubt it'll be the end of the story so it's going to be
patchy and volatile as with Turkey -- we think the trigger could
be pulled before the end of the year, and South Africa will be
downgraded to junk."
Turkey, another big emerging economy, has seen many
investors flee after its credit rating was cut to junk.
Emerging assets elsewhere fared little better as the dollar
touched 2-1/2 month highs. Markets now price about a 70 percent
chance of a December interest rate rise by the U.S. Federal
Reserve, according to CME Group's FedWatch tool.
MSCI's emerging equity benchmark tumbled more than
1 percent, dragged down by Asia where Hong Kong recorded
a 1.3 percent drop on its return from a holiday.
Stocks in Seoul closed 1.2 percent lower after
market heavyweight Samsung Electronics said it would
halt sales of its Galaxy Note 7 phone globally over fire
concerns, sparking a sell-off in its shares.
Samsung shares fell more than 8 percent, their biggest
one-day fall since Sept 2008.
Russian dollar-denominated stocks fell 0.7 percent,
pulling back from a 16-month high hit on Monday, while shares in
Turkey matched the fall.
On currency markets, Russia's rouble weakened nearly
1 percent - its biggest daily loss in four weeks - also dragged
down by oil prices retreating from the one-year high hit
on Monday. Turkey's lira weakened by 0.4 percent in its
third straight session in the red.
Earlier, the Korean won fell 1.3 percent to the dollar, hit
by Samsung-related equity outflows
Meanwhile investors were getting ready to meet Saudi
Arabia's policymakers for investor roadshows starting on
Wednesday. Its debut bond is expected to amount to at least $10
billion - one of the largest debt sales by an emerging
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 908.51 -10.17 -1.11 +14.40
Czech Rep 890.06 -0.94 -0.11 -6.93
Poland 1762.28 -3.67 -0.21 -5.21
Hungary 28581.47 +11.45 +0.04 +19.48
Romania 6901.08 -10.44 -0.15 -1.47
Greece 585.44 +2.17 +0.37 -7.27
Russia 1011.24 -6.64 -0.65 +33.58
South Africa 45464.87 +346.75 +0.77 -0.73
Turkey 77363.28 -472.02 -0.61 +7.86
China 3066.09 +17.95 +0.59 -13.37
India 28082.34 +21.20 +0.08 +7.52
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.02 27.01 -0.03 -0.07
Poland 4.27 4.27 -0.23 -0.40
Hungary 304.57 303.84 -0.24 +3.31
Romania 4.48 4.49 +0.19 +0.77
Serbia 123.00 123.05 +0.04 -1.24
Russia 62.39 61.81 -0.94 +16.92
Kazakhstan 330.55 332.00 +0.44 +3.01
Ukraine 25.84 25.79 -0.17 -7.29
South Africa 14.25 13.81 -3.11 +8.52
Kenya 101.10 101.20 +0.10 +1.09
Israel 3.79 3.79 -0.19 +2.51
Turkey 3.08 3.07 -0.40 -5.40
China 6.72 6.70 -0.17 -3.34
India 66.58 66.48 -0.14 -0.57
Brazil 3.20 3.21 +0.07 +23.62
Mexico 18.95 18.92 -0.16 -9.39
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 350 -3 .07 7 68.72 1
All data taken from Reuters at 09:19 GMT. Currency percent
change calculated from the daily U.S. close at 2130 GMT.
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 )
(Additional reporting by Adela Suliman; Editing by Robin