EMERGING MARKETS-Stocks hit 2-year high despite mounting pressure on Qatari riyal
By Sujata Rao
LONDON, June 9 (Reuters) - Emerging stocks inched to new two-year highs on Friday and were set to end the week in the black but Qatar's riyal fell further in the offshore forwards markets after a rollercoaster week that saw its stocks lose 7 percent.
Overall emerging markets were kept in check by a firmer dollar and weaker Chinese factory gate prices that again cast doubts on economic growth, but MSCI's emerging equity index hovered near flat for a half-percent rise this week .MSCIEF .
Qatari stocks had stabilised on Thursday after sharp falls but pressure on its currency and bonds showed little sign of abating, with one-year dollar/riyal forwards hitting the lowest since December 2015 in offshore trade QAR1Y=W .
The riyal has traded as low as 3.7 per dollar in onshore forward markets, Thomson Reuters data shows QAR1YV= , a record low, and some 1.6 percent below its spot pegged rate QAR= .
"There is a bit of a spike but Qatar has plenty of reserves to fight the attack on the currency, so we don't think a de-peg is on the cards," Societe Generale (PA: SOGN ) strategist Regis Chatellier said. He ruled out defaults despite pressure on Qatari bonds.
Sovereign credit default swaps (CDS) also rose to a new seven-month high of 101 basis points (bps), almost double week-ago levels, according to IHS Markit.
Saudi CDS touched their highest since February, indicating some spill over to the rest of the Gulf but this also is not expected to be serious.
"Obviously this is not a positive story for ... any of the other countries ... it has a negative impact on the image of GCC (Gulf Cooperation Council) as one unit and it makes it potentially more difficult to implement reforms overall," MUFG strategist Trieu Pham said. He noted the GCC plan to implement a value-added tax from next year.
But a positive global backdrop would limit the fallout, he said. "We see that even Qatar (assets) has not gone through the roof. At this point everything looks controllable so I don't see it spilling out (of the Middle East)."
Elsewhere, the Czech crown jumped 0.4 percent to a new three-year high versus the euro EURCZK= , with higher-than-expected May inflation data pointing to possible monetary tightening later this year, and contrasting with the European Central Bank's (ECB's) dovish stance bond yields rose across the curve, with five-year yields hitting 10-day highs CZ5YT=RR .
Elsewhere, investors are carefully watching developments in Venezuela, which missed a $30 million interest payment to the CAF development bank, the Development Bank of Latin America, days after missing a $1 billion repayment to Russia.
The Ivory Coast meanwhile issued the first euro-denominated bond sold by any sub-Saharan African country besides South Africa. GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB )
Emerging Markets Prices from Reuters
Equities
Latest
Net Chg % Chg % Chg
on year
Morgan Stanley (NYSE: MS )
Emrg Mkt Indx .MSCIEF 1020.61
+1.55 +0.15 +18.36
Czech Rep
1010.07
+3.85 +0.38 +9.60
Poland
2344.45
+4.22 +0.18 +20.36
Hungary
35255.12 -15.83 -0.04 +10.16
Romania
8550.16 -123.40 -1.42 +20.68
Greece
780.35
+1.30 +0.17 +21.24
Russia
1043.84
+5.34 +0.51 -9.41
South Africa
.JTOPI 45725.04
-8.74 -0.02 +4.15
Turkey
.XU100 98894.96 +917.42 +0.94 +26.56
China
3158.75
+8.41 +0.27 +1.78
India
.BSESN 31217.71
+4.35 +0.01 +17.24
Currencies
Latest
Prev
Local
Local
close currency currency
% change % change
in 2017
Czech Rep
EURCZK=
26.23
26.28 +0.21
+2.97
Poland
EURPLN=
4.19
4.20 +0.23
+5.19
Hungary
EURHUF= 307.55
307.68 +0.04
+0.41
Romania
EURRON=
4.56
4.56 +0.12
-0.50
Serbia
EURRSD= 122.50
122.55 +0.04
+0.69
Russia
56.97
56.88 -0.15
+7.54
Kazakhstan
KZT=
315.68
314.22 -0.46
+5.69
Ukraine
26.13
26.12 -0.06
+3.33
South Africa ZAR=
12.93
12.90 -0.20
+6.22
Kenya
KES=
103.15
103.35 +0.19
-0.76
Israel
ILS=
3.53
3.52 -0.15
+9.07
Turkey
3.52
3.52 +0.02
+0.12
China
CNY=
6.80
6.80 +0.03
+2.15
India
INR=
64.33
64.24 -0.14
+5.62
Brazil
3.26
3.26 -0.00
-0.23
Mexico
18.23
18.20 -0.16 +13.64
Debt
Index Strip Spd Chg %Rtn Index
Sov'gn Debt 11EML EMBIG 318
0
.04 7 90.78 1
All data taken from Reuters at 0932 GMT.
Currency percent change calculated from the daily U.S. close at 2130 GMT.
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