* For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml
* For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5
By Claire Milhench
LONDON, April 18 The Turkish lira firmed and
sovereign dollar bond prices rose on Tuesday after President
Tayyip Erdogan's victory in a referendum that handed him
sweeping powers, while emerging equities fell as geopolitical
tensions dampened risk appetite.
The lira strengthened 0.2 percent but was still off a
two-week high hit on Monday after a narrow victory for Erdogan
in Turkey's referendum on constitutional reform.
Erdogan has argued that a concentration of power is needed
to prevent instability, but opposition parties challenged the
result. European monitors said the referendum did not meet
Turkish dollar bond prices rose across the curve to
five-month highs and five-year credit default swaps
traded at a two-week low of 233 basis points (bps), according to
IHS Markit data.
The average yield spread paid by Turkish sovereign bonds
over U.S. Treasuries on the JPMorgan EMBI Global
Diversified narrowed by 3 bps to 305 bps, an 11-day low.
Greg Saichin, chief investment officer for emerging markets
fixed income at Allianz Global Investors, said the tight result
was a surprise.
"The markets are taking this initial result as positive in
so far as the buck now stops with one person and in theory
political noise should come down," he said, adding that the next
battleground will be the planned 2019 election.
"Should the economic outlook deteriorate, or the system move
towards a more autocratic style that does not sit well with
voters, chances are that the next election will be again about a
referendum on Erdogan's new powers," he said.
Turkish economic weakness was exposed in data released on
Monday showing a rise in the budget deficit and unemployment at
a seven-year peak.
Away from Turkey, emerging market assets sold off, with
MSCI's emerging equities index down 0.3 percent as
tensions with North Korea kept investors away from riskier
Amongst the biggest fallers were Hong Kong down 1.4
percent to a one-month low, and Chinese mainland stocks,
down 0.8 percent. But South Korea steadied, rising 0.1
percent to an 11-day high.
The United States and South Korea have pledged to forge a
stronger alliance but U.S. Vice President Mike Pence said the
free trade agreement between the two will be reviewed. The
Korean won fell 0.7 percent to a one-week low.
South African assets remained under pressure, with stocks
down 0.7 percent and the rand slipping 0.5
percent against the dollar, off a near three-week high.
Russian dollar-denominated stocks fell 0.6 percent
and the rouble weakened 0.5 percent off a two-week high,
with oil prices heading back towards $55 a barrel.
The Hungarian forint firmed 0.2 percent against
the euro after slumping to a four-month low on Monday. Thousands
of Hungarians rallied in Budapest on Saturday against what they
said were attempts by the government to silence critical voices,
in the latest mass protest.
Ashmore, a bellwether stock for the emerging
markets asset management sector, saw quarterly net inflows for
the first time in nearly three years, helping to drive a 7
percent rise in its total assets.
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 959.21 -3.50 -0.36 +11.24
Czech Rep 975.55 -0.97 -0.10 +5.85
Poland 2251.36 +17.73 +0.79 +15.58
Hungary 32566.38 -56.02 -0.17 +1.76
Romania 8238.76 -19.97 -0.24 +16.28
Greece 679.84 -3.73 -0.55 +5.62
Russia 1085.45 -8.82 -0.81 -5.80
South Africa 46340.87 -303.62 -0.65 +5.56
Turkey 90674.31 +20.51 +0.02 +16.04
China 3196.60 -25.57 -0.79 +3.00
India 29523.67 +110.01 +0.37 +10.88
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.74 26.65 -0.33 +1.00
Poland 4.24 4.25 +0.12 +3.84
Hungary 312.79 313.54 +0.24 -1.27
Romania 4.52 4.52 +0.12 +0.41
Serbia 123.54 123.54 +0.00 -0.15
Russia 56.17 55.86 -0.55 +9.07
Kazakhstan 310.60 310.81 +0.07 +7.42
Ukraine 26.85 26.82 -0.13 +0.56
South Africa 13.35 13.28 -0.51 +2.87
Kenya 103.35 103.30 -0.05 -0.95
Israel 3.66 3.66 -0.06 +5.23
Turkey 3.69 3.70 +0.19 -4.50
China 6.89 6.88 -0.08 +0.83
India 64.51 64.46 -0.07 +5.33
Brazil 3.10 3.10 +0.00 +5.01
Mexico 18.51 18.50 -0.07 +11.93
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 334 2 .05 7 76.26 1
(Additional reporting by Karin Strohecker Editing by Jeremy