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EMERGING MARKETS-Emerging stocks at 2-week lows, Turkish assets rebound
October 24, 2017 / 9:09 AM / a month ago

EMERGING MARKETS-Emerging stocks at 2-week lows, Turkish assets rebound

LONDON, Oct 24 (Reuters) - Emerging market equities slipped to two-week lows on Tuesday, tracking falls in developed markets, but Turkish bank stocks and the lira recovered some ground after selling off on Monday.

Turkish assets had suffered in the wake of a report that Turkish lenders could face substantial U.S. fines for evasion of Iran sanctions.

The national banking regulator rebutted the report but Turkish bank stocks fell 3.2 percent and the broader index ended down over 1 percent.

Turkish assets recovered somewhat on Tuesday with the lira firming 0.2 percent against the dollar, while bank shares rose 0.1 percent and the broader index bounced 0.35 percent.

William Jackson, senior emerging economist at Capital Economics, said the prospect of fines remained a concern as banking stocks accounted for a significant portion of the broader market capitalisation.

“This is a stock market that has risen dramatically over the course of the year and perhaps valuations are starting to look a bit stretched,” he said. Turkey’s visa spat with the United States had also served as a reminder of some of the political risks around Ankara.

MSCI’s benchmark emerging stocks index slid 0.2 percent, with Poland losing 0.5 percent as bank stocks Pekao and Alior, which are considering a merger, tumbling around 4 percent.

Moscow shares fell 0.2 percent and Hong Kong stocks 0.4 percent.

These losses offset gains in other Asian markets, with Indonesia shares up 0.2 percent to a record high, while Chinese mainland shares rose 0.7 percent to a fresh 26-month high on the last day of the ruling Communist Party’s 19th congress.

About 100 Shanghai-listed companies have disclosed third-quarter earnings so far and the combined net profit has jumped 47 percent from a year earlier. South Korea’s bourse also eked out a new all-time high close.

The South African rand remained under pressure ahead of Finance Minister Malusi Gigaba’s budget speech on Wednesday at which economists expect him to address concerns over low revenues.

Political jostling ahead of the African National Congress conference in December is also unnerving investors.

The Mexican peso also remained in the firing line, falling 0.4 percent against the dollar, as NAFTA negotiations remain a source of uncertainty.

The Hungarian forint was slightly weaker against the euro ahead of a central bank meeting at which no change is expected in the key rate, currently at 0.9 percent.

“They cut the deposit rate last month despite inflation being quite high and wage growth being quite fast,” said Jackson.

“Our sense is we will see a dovish statement and no reaction in financial markets. But if there was any move to ease policy further or even a signal there could be action in December, we could see the forint weaken a bit.”

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

on year

Morgan Stanley Emrg Mkt Indx 1113.61 -2.29 -0.21 +29.15

Czech Rep 1049.70 +1.45 +0.14 +13.90

Poland 2459.56 -13.86 -0.56 +26.27

Hungary 39102.83 -29.79 -0.08 +22.18

Romania 7890.93 -9.65 -0.12 +11.37

Greece 737.52 +3.00 +0.41 +14.59

Russia 1128.98 -2.10 -0.19 -2.03

South Africa 51555.32 -114.57 -0.22 +17.43

Turkey 07727.93 +424.68 +0.40 +37.87

China 3388.25 +7.55 +0.22 +9.17

India 32570.13 +63.41 +0.20 +22.32

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 25.65 25.66 +0.01 +5.27

Poland 4.24 4.23 -0.26 +3.94

Hungary 308.42 307.94 -0.16 +0.13

Romania 4.60 4.59 -0.03 -1.33

Serbia 119.32 119.14 -0.15 +3.38

Russia 57.52 57.48 -0.07 +6.51

Kazakhstan 334.21 335.87 +0.50 -0.17

Ukraine 26.68 26.57 -0.41 +1.20

South Africa 13.73 13.70 -0.17 +0.03

Kenya 103.60 103.60 +0.00 -1.19

Israel 3.50 3.49 -0.14 +10.13

Turkey 3.71 3.72 +0.10 -4.98

China 6.63 6.64 +0.14 +4.74

India 64.96 65.02 +0.08 +4.59

Brazil 3.24 3.24 +0.00 +0.48

Mexico 19.14 19.07 -0.37 +8.21

Debt Index Strip Spd Chg %Rtn Index

Sov‘gn Debt EMBIG 303 -1 .00 8 04.22 1

Reporting by Claire Milhench; editing by Mark Heinrich

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