Emerging market stocks dip on global growth fears, FX weakens

  • Reuters
  • Stock Market News
Emerging market stocks dip on global growth fears, FX weakens
Credit: © Reuters.

* IMF cut to global growth forecast weighs on emerging markets

* Russian rouble, stocks slip amid weak oil prices

* Turkish lira drops 0.4 percent

* Romanian leu not far from all time low against euro

By Aaron Saldanha

Jan 22 (Reuters) - Emerging market stocks and currencies slid on Tuesday, as fears of slowing global growth left investors queuing up to exit developing world markets and move into safer assets which reflected their downbeat risk appetite.

The International Monetary Fund trimmed its global growth forecasts on Monday as trade tensions and uncertainty loomed, a warning which came shortly after China reported its slowest growth in 28 years for 2018. Weak risk sentiment among investors on Tuesday propped the dollar to hold at a near three-week high. FRX/ Leather, a senior economist with Capital Economics, said a slowdown in emerging markets would be concentrated in export-oriented Asia, where the impact of tepid global growth would be seen most clearly.

MSCI's index of developing world stocks .MSCIEF was 0.7 percent lower, retreating from a more than 15-1/2 week high notched on Monday, as weakness in index heavyweights China .SSEC and South Korea .KS11 prevailed. .SS KRW/

Chinese blue-chip stocks .CSI300 fell 1.3 percent, their steepest decline in more than a month and a half, buffeted by worries about the implications of slowing demand will have for the world's manufacturing powerhouse.

Worries about slower growth in the world's second-largest economy, combined with the greenback's strength, sent the onshore Chinese yuan CNY=CFXS to a near two-week low as it breached the closely watched 6.8 yuan per dollar mark. CNY/

Russia's rouble RUB= and local stocks .IMOEX each weakened about 0.2 percent, pressured by a 1.3 percent drop in the price of oil LCOc1 , a key export for the world's largest country. O/R

Emerging Europe was another area of weakness among developing world markets, Capital Economics' Leather said, with Turkey "probably going to experience a deep recession this year."

Turkey's lira TRY= softened 0.4 percent to give back all gains made since Thursday.

Commodity giant South Africa's rand ZAR= shed 0.7 percent while South African equities .JTOPI fell 0.3 percent. Shoprite Holdings Ltd SHPJ.J led losses on the stocks index, down 2.9 percent, after reporting anaemic growth in the half year to December 2018. agency Moody's downgraded Lebanon's sovereign rating to Caa1, adding that the government's debt rescheduling could constitute a default under the rating firm's definition. Europe, Romania's leu weakened a touch against the euro EURRON= and was anchored not far from an all-time low logged against the common currency on Monday. The country's main stocks index .BETI dipped 0.4 percent. CEE/

Romanian assets have underperformed Central European peers since the government last month announced new levies on the banking and energy sectors.

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