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EMERGING MARKETS-Russian bank bailout talk hits Moscow financial shares, elsewhere flat pre-Fed
September 20, 2017 / 9:05 AM / 3 months ago

EMERGING MARKETS-Russian bank bailout talk hits Moscow financial shares, elsewhere flat pre-Fed

LONDON, Sept 20 (Reuters) - Russia’s bank and financial shares index fell on Wednesday after a lender asked authorities for a bailout, while other emerging assets flatlined, awaiting the outcome of the U.S. Federal Reserve meeting.

Emerging stocks traded just off three-year highs and sovereign bond yields have also pulled off multi-year lows, with the Fed expected to announce a decision to start paring bond holdings and provide hints of a possible December rate hike.

“The pain move in emerging markets has already been experienced over the past two weeks as we’ve seen a steep rise in the core rates market both in Europe and the U.S.,” Societe Generale analyst Phoenix Kalen said, predicting a “day of consolidation”.

“Looking ahead the overall backdrop is still very benign with the gradual pace of normalisation and the well-flagged signals from the (European Central Bank) and Fed,” she added.

The Fed meeting overshadowed fresh threats from U.S. President Donald Trump against North Korea, with a flat dollar even allowing the Korean won to strengthen 0.3 percent.

Investors are awaiting more news from Russia where the central bank was considering a request to bail out B&N, the country’s 12th largest bank by assets, just three weeks after Otkritie bank was rescued.

While Russia’s main equity index was flat, bank shares slipped 0.3 percent to a two-week low. But the losses were offset by a 2 percent rise in Aeroflot which completed a sale of close to 5 percent of its shares.

The rouble eased 0.11 percent, staying off three-week lows hit on Tuesday amid general emerging market weakness.

“The reality is that there are a few institutions where the funding structure has been very weak – it’s the same situation we saw with Otkritie. They couldn’t hold the balls in the air over time,” said a trader at a Russian brokerage.

“The central bank could have acted earlier but now that they’re acting, they’re acting extremely well. There is no panic selling, no move on the rouble, no problems in interbank lending.”

South African data showed annual inflation quickening slightly in August to 4.8 percent. The rand firmed 0.2 percent but the data is unlikely to dissuade the central bank from cutting rates on Thursday.

“We’re expecting the (central bank) to continue with another 25 basis points cut as inflation has come down quite a bit. Also, it’s quite lacklustre and disappointing news coming out of macro side so the economic data warrants more monetary easing.” SocGen’s Kalen said.

The Hungarian forint was flat after the central bank undertook expected policy easing measures on Tuesday, though its bond yields fell after the decision, taking average yields to a new record low around 1.53 percent on JPMorgan’s GBI-EM index. Hungary was the top performer on the index on Tuesday, JPM said.

The Mexican peso was flat after touching two-week lows against the dollar following news of damage and fires caused by a deadly earthquake.

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 1110.85 +1.22 +0.11 +28.83

Czech Rep 1046.05 -1.46 -0.14 +13.50

Poland 2506.48 +3.67 +0.15 +28.67

Hungary 38128.10 -47.98 -0.13 +19.14

Romania 7922.83 -54.20 -0.68 +11.82

Greece 755.41 -7.45 -0.98 +17.37

Russia 1111.98 +3.27 +0.29 -3.50

South Africa 49533.59 -218.11 -0.44 +12.83

Turkey 05058.10 +140.33 +0.13 +34.45

China 3366.37 +9.52 +0.28 +8.47

India 32434.19 +31.82 +0.10 +21.81

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 26.12 26.09 -0.11 +3.40

Poland 4.28 4.28 +0.08 +2.98

Hungary 308.19 308.06 -0.04 +0.20

Romania 4.60 4.60 +0.00 -1.38

Serbia 118.72 118.82 +0.08 +3.90

Russia 58.13 58.07 -0.09 +5.40

Kazakhstan 341.57 341.47 -0.03 -2.32

Ukraine 26.18 26.10 -0.31 +3.13

South Africa 13.29 13.32 +0.18 +3.28

Kenya 103.22 103.20 -0.02 -0.82

Israel 3.50 3.51 +0.22 +9.92

Turkey 3.49 3.49 +0.07 +1.19

China 6.57 6.58 +0.10 +5.62

India 64.28 64.30 +0.02 +5.70

Brazil 3.13 3.13 +0.01 +3.79

Mexico 17.78 17.79 +0.08 +16.52

Debt Index Strip Spd Chg %Rtn Index

Sov‘gn Debt EMBIG 311 2 .08 8 04.66 1

All data taken from Reuters at 08:43 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

Reporting by Sujata Rao and Claire Milhench Editing by Jeremy Gaunt

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