EMERGING MARKETS-Stocks extend losses; S.Africa takes another hit on ratings fear
By Claire Milhench
LONDON, March 9 (Reuters) - Emerging equities slipped for a second day on Wednesday as more Chinese growth concerns led some to sell out of the recent seven-day rally, while South African assets took a hit from Moody's' decision to put its rating on review.
The rand extended its losses against the dollar after falling more than 1 percent on Tuesday, when ratings agency Moody's placed South Africa's sovereign credit rating on review for a downgrade.
South Africa's five-year credit default swaps rose 2 basis points to 335 bps after a nine bps move on Tuesday, according to Markit.
Moody's cited the economy's weak growth prospects and worsening fiscal position. It is the only agency that does not have South Africa a notch away from junk status.
"South Africa's investment grade rating is under threat - they won't be able to keep it," said Per Hammarlund, chief emerging markets strategist at SEB. "It was largely expected as the deterioration in South Africa has gone on so long now."
The country's current account deficit has also widened more than expected.
MSCI's benchmark emerging equity index slipped 0.3 percent, giving up more of the 12.5 percent gains it chalked up from a Feb 12 trough. It fell 1 percent on Tuesday.
Investors have become cautious on the growth outlook again after a sharp fall in Chinese exports in February, and Hammarlund said they were likely banking profits following the rally. Continuación...