LONDON, Jan 14 (Reuters) - Big copper firms from India’s Hindalco to Poland’s KGHM led emerging equity falls on Wednesday as prices for the metal plunged to 5-1/2 year lows, fuelling concerns about growth and deflation in many countries.
Copper’s rout combined with oil’s 60 percent slide in the past six months is weighing on commodity producers from Russia to Chile, while growth fears are pressuring equity markets worldwide. MSCI’s emerging equity index fell half a percent while stocks in commodity-heavy South Africa shed 1 percent.
London-listed emerging market miners such as Antofagasta and Kazakhmys fell 10 and 20 percent respectively, while Polish shares were led 0.8 percent lower by copper smelter KGHM’s 5 percent fall .
Indian miners Sterlite and Hindalco and also lost over 5 percent, dragging the index lower
Analysts say the sheer scale of the commodity rout is muddying the picture for non-commodity markets too, potentially hitting investment and in many cases exacerbating deflation.
“The only clear repositioning has been away from net commodity exporters towards importers. But...although we’re very positive on Turkey you’ll have secondary effects from issues such as lower revenues from Middle Eastern countries which in turn hits flows into Turkey,” said Simon Quijano-Evans, head of emerging markets research at Commerzbank.
The moves are pressuring many currencies - Chile’s peso for instance has already lost 2 percent this year. The copper and oil slide also raises pressure for a fresh devaluation of Kazakhstan’s tenge, with forwards pricing it 17 percent weaker over three months.
In Russia, already reeling from crisis, the rouble fell 1 percent to new 3-1/2 month lows, while the pegged Belarus rouble fell 5 percent, its fourth devaluation this month.
Central European currencies weakened again on expectations that deflation will bring more interest rate cuts. The zloty fell 0.4 percent to the euro and 0.8 percent versus the dollar before a central bank meeting that some expect may yield a rate cut.
The forint slipped 0.5 percent after data showed annual prices down 0.9 percent, more than double forecasts. The Czech crown slipped 0.6 percent. Swaps are pricing policy easing in all three markets, with potential euro zone money-printing likely forcing central European authorities to act.
“Because of the continued plunge in oil and other commodity prices, the risk of more entrenched and longer-lasting CPI deflation is increasing, making rate cuts more likely in the coming months,” BNP Paribas analysts said of Poland.
Earlier, most Asian currencies firmed, except Malaysia’s ringgit which hit new 5-1/2-year lows.
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 ) (Additional reporting by Chris Vellacott)