LONDON, March 5 (Reuters) - Emerging market stocks fell to a three-week low on Thursday as a buoyant dollar and China calling its lowest growth for 25 years a ‘new normal’ soured the mood among investors.
The MSCI emerging equities index was 0.2 percent lower at a level last seen in mid February, while the Asia excluding Japan benchmark, fell 0.4 percent.
A strengthening dollar, driven by anticipation of tighter monetary policy in the United States, continues to pressure emerging assets. The dollar index reached an 11-year high and most emerging currencies weakened.
“There’s a lot of expectations of a Fed rate hike built in. There are exceptions, like the central European countries, but most of the dollar-based currencies are really focusing on the U.S. and the likely pickup in U.S. rates,” said Simon Quijano-Evans, head of emerging research at Commerzbank.
Also adding to pressure on emerging markets is the prospect of an economic slowdown in China after Beijing announced a 7 percent growth target for the year and signaled that the lowest rate of expansion for a quarter of a century is the “new normal”.
Shanghai stocks traded 1 pct lower while Hong Kong dropped 1.2 percent.
Turkey’s lira was 0.9 percent lower against the dollar as investors remained nervous about threats to central bank independence following tirades against monetary policy by president Tayyip Erdogan.
Shares in Turkey’s Akbank were 5 percent lower after Citigroup announced it has sold its nearly 10 percent stake for $1.2 billion.
Earlier, the Indonesian rupiah hit a near 17-year low to the dollar while the ringgit slid to six-year lows .
Eastern European bourses were firmer on the prospect of monetary stimulus for euro zone trading partners ahead of a European Central Bank meeting later in the day.
Budapest rose 0.7 percent and Warsaw traded 0.5 percent higher. Poland on Wednesday cut rates by 50 basis points, twice as much as expected, and signaled its monetary easing cycle had come to an end.
That helped the zloty rise 0.2 percent to the euro as the currency is now seen holding its yield advantage over the single currency. The forint rose 0.3 percent
With oil markets holding above $60 per barrel, Moscow stocks advanced, with the dollar-denominated RTS index up 1.5 percent while the rouble firmed 0.1 percent against the dollar.
Belarus’ Finance Minister Vladimir Amarin said on Thursday the country plans to issue at least $700 million worth of domestic bonds denominated in foreign currency this year.
In 2014, Belarus placed $800 million worth of bonds on the local market.
For GRAPHIC on emerging market FX performance 2015, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2015, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2015, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2015, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see ) (Editing by Toby Chopra)