EMERGING MARKETS-Tariff threat rattles emerging stocks, lira leads FX losses
By Claire Milhench
LONDON, Sept 17 (Reuters) - Emerging equities fell over 1 percent on Monday in the wake of reports that the United States was about to announce a new round of tariffs on some $200 billion worth of Chinese imports, while Turkey's lira once again led currency losses.
MSCI's benchmark emerging stocks index .MSCIEF was down 1.2 percent as investors braced for more measures in the ongoing U.S.-Sino trade war, with the Wall Street Journal reporting that Beijing may reject an offer of new trade talks if the U.S. moves ahead with its latest tariff round. new tariffs, reported to be set at 10 percent rather than the 25 percent Washington had earlier said it was considering, will cover internet technology products and other electronics, printed circuit boards and consumer goods.
"The tariffs are a bit lower than they could have been, but still enough to weigh on sentiment," said Per Hammarlund, chief emerging markets strategist at SEB.
The Asian manufacturing economies took the brunt of the selling, with Chinese mainland shares .CSI300 .SSEC down 1.1 percent and Hong Kong .HSI down 1.3 percent.
Indonesia .JKSE lost 1.8 percent, with the country's trade deficit larger than expected in August as export growth slowed. shares .NSEI fell 1.1 percent and both countries' currencies remained under pressure, with the Indonesian rupiah IDR= down around 0.7 percent and India's rupee INR= 0.9 percent. The rupee is Asia's worst-performing currency against the dollar this year, down nearly 12 percent.
Late on Friday India announced measures aimed at stemming the fall, including cutting imports, easing overseas borrowing norms for manufacturers and relaxing rules around banks raising rupee-denominated overseas bonds. Turkish lira TRY= was the biggest daily faller, down 1.4 percent to levels hit prior to last Thursday's hefty 625 basis point interest rate rise to 24 percent. focus is now turning to the damage to the real economy from Turkey's financial shock, with the government's medium-term economic plan due out on Thursday.
"The government needs to show they understand the consequences of the present lira crisis ... how much this impacts the broader macro picture and government finances," said Hammarlund.
"They need to show they are realistic about their budget assumptions for next year. Otherwise the lira will quickly come under renewed pressure."
President Tayyip Erdogan said on Friday that Turkey was freezing new government investment projects to cut public spending and tackle double-digit inflation. in emerging Europe, Budapest shares .BUX fell 0.6 percent and the forint EURHUF= was trading off Friday's three-week highs against the euro ahead of Tuesday's central bank meeting.
The bank is expected to keep rates on hold at record lows, but may give clues on how it will withdraw liquidity from domestic markets. are also awaiting an address from Hungary's prime minister Viktor Orban later today following last week's vote by the European parliament to sanction Hungary for flouting European Union rules on democracy and civil rights. stocks .EGX30 fell 0.5 percent after slumping 3.6 percent on Sunday to mid-February lows in their biggest one-day loss since January 2017.
The moves followed the seizure of assets belonging to some Muslim Brotherhood leaders and an arrest order on former President Hosni Mubrak's sons Alaa and Gamal on charges of stock market manipulation. GRAPHIC on emerging market FX performance 2018, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2018, see http://tmsnrt.rs/2dZbdP5
Emerging Markets Prices from Reuters
Equities
Latest
Net Chg % Chg % Chg
on year
Morgan Stanley (NYSE: MS )
Emrg Mkt Indx .MSCIEF 1016.61 -11.92 -1.16 -12.24
Czech Rep
1095.23
-0.23 -0.02 +1.58
Poland
2225.38
-6.69 -0.30 -9.58
Hungary
36171.48 -97.69 -0.27 -8.14
Romania
8163.86
+1.17 +0.01 +5.29
Greece
682.67
+0.98 +0.14 -14.92
Russia
1088.79
-5.94 -0.54 -5.69
South Africa
.JTOPI 49918.48 -522.50 -1.04 -4.98
Turkey
.XU100 94875.40 +115.76 +0.12 -17.74
China
2651.79 -29.85 -1.11 -19.82
India
.BSESN 37629.97 -460.67 -1.21 +10.49
Currencies
Latest
Prev
Local
Local
close currency currency
% change % change
in 2018
Czech Rep
EURCZK=
25.45
25.45 -0.00
+0.29
Poland
EURPLN=
4.30
4.30 +0.07
-2.87
Hungary
EURHUF= 324.81
324.70 -0.03
-4.40
Romania
EURRON=
4.64
4.64 -0.10
+0.76
Serbia
EURRSD= 118.24
118.20 -0.03
+0.14
Russia
68.11
68.02 -0.13 -15.34
Kazakhstan
KZT=
371.82
371.07 -0.20 -10.49
Ukraine
28.11
28.14 +0.11
+0.12
South Africa ZAR=
14.98
14.92 -0.42 -17.52
Kenya
KES=
100.83
100.85 +0.02
+2.25
Israel
ILS=
3.58
3.58 -0.12
-2.90
Turkey
TRY=
6.22
6.17 -0.85 -39.10
China
CNY=
6.87
6.87 -0.01
-5.27
India
INR=
72.47
71.87 -0.82 -11.92
Brazil
4.17
4.17 -0.00 -20.65
Mexico
18.86
18.88 +0.10
+4.16
Debt
Index Strip Spd Chg %Rtn Index
Sov'gn Debt 11EML EMBIG 382
1
.00 7 70.15 1
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