November 11, 2016 / 11:07 AM / 2 years ago

EMERGING MARKETS-Peso at record low as bond storm batters emerging mkts

By Helen Reid
    LONDON, Nov 11 (Reuters) - Emerging markets were hit for a
third day running on Friday, with stocks tumbling and Mexico's
peso slumping to a record low as Donald Trump's U.S. election
win triggered a sharp jump in global borrowing costs.
    Yields on 10-year U.S. Treasuries, the driver of world
borrowing rates, have spiked over 40 basis points in the past
two days as investors scramble to readjust their positions to
hedge against the uncertainty caused by Trump's victory.
    Mexico's peso, which has become a lightning rod for
market anxiety due to fears about a ripping up of trade deals,
was on course for its worst week since the explosion of the 2008
financial crisis, having plunged over 8 percent.
    MSCI's main pan-EM stocks index has also been in
the firing line and a 2.1 percent drop on Friday took its losses
since Wednesday's election result to almost 5.5 percent.
    "You are seeing an almost indiscriminate selling in emerging
markets" said UniCredit EM FX strategist Kiran Kowshik.
    "Given that there is a lot of uncertainty on (Trump) policy
people are just cutting positions. They aren't asking what
countries will be at a disadvantage and which could be at an
    Asian currencies were again some of the hardest hit
following campaign talk by Trump of imposing higher tariffs for
those selling into the U.S.
    Central banks in Malaysia and Indonesia were seen
intervening in their foreign exchange markets on Friday, as most
Asian currencies took a dive.
    Malaysia's ringgit hit its weakest in more than 12 years in
forwards markets as foreign investors dumped government bonds.
The Philippine peso touched a seven-year trough, while  
Indonesia's rupiah and South Korean won both fell
to their weakest in more than four months.
    Malaysia's central bank governor Muhammad Ibrahim gave
markets the hint that it would be intervening to prop up the
ringgit. "We don't want to be dictated by factors that have
nothing to do with the country's fundamentals," Ibrahim said.
    Bond markets remained in retreat too. Emerging sovereign
dollar bonds average yield premium to Treasuries jumped 20 bps
on Thursday to 350 bps on JPMorgan's EMBI Global index, matching
the 3 month highs hit on November 4. They hovered at this level
on Friday. 
    And as the Mexican peso swooned, its yield spreads stood at
323 basis points, the highest since March, having widened almost
30 bps this week, while in South Africa, which has been a major
driver of EM sentiment, yields jumped to 300 bps.
    The South African rand was down 1.5 percent at its
lowest since mid-October and Turkey's lira was facing a
near 3.5 percent loss on the week after six falls in the last
seven sessions have sent it to a record low this week. 
    Russian markets, which are seen as a potential beneficiary
of Trump's victory if relations between Moscow and Washington
improve, were calmer with the rouble rebounding from losses in
the previous session. 
    Russian spreads have actually snapped back by 12 bps over
the past week to 224 bps though they were 7 bps wider on the
    Other commodity-producing emerging economies could also
stand to gain from Trump's proposed infrastructure splurge, but
fear of the unknown is taking precedence for now.
    In contrast in China, the yuan hit a six-year low and after
the market close official data showed banks had given out fewer
new yuan loans than expected last month as policymakers bid to
avoid an overheating in key parts of the debt-fueled economy.
    "The drop in new lending last month was seasonal and does
not reflect a shift in broad credit growth, which was stable in
October," Julian Evans-Pritchard at Capital Economics said in a
    For GRAPHIC on emerging market FX performance 2016, see

    For GRAPHIC on MSCI emerging index performance 2016, see
    For CENTRAL EUROPE market report, see 
    For TURKISH market report, see 
    For RUSSIAN market report, see )
     Emerging Markets Prices from Reuters            
 Equities                  Latest    Net Chg  % Chg  % Chg      
                                                     on year    
 Morgan Stanley               
 Emrg Mkt Indx    854.55   -21.08   -2.41   +7.61     
 Czech Rep            899.73    -1.96   -0.22   -5.92     
 Poland           1796.75    +6.09   +0.34   -3.36     
 Hungary           30532.24    -8.08   -0.03  +27.64     
 Romania           6851.71    +6.18   +0.09   -2.18     
 Greece              586.45    -0.57   -0.10   -7.11     
 Russia             979.04   -14.80   -1.49  +29.32     
 South Africa    44227.72  -795.27   -1.77   -3.43     
 Turkey          75525.23  -835.13   -1.09   +5.30     
 China             3195.88   +24.60   +0.78   -9.70     
 India           26818.82  -698.86   -2.54   +2.69     
 Currencies              Latest    Prev    Local    Local       
                                   close   currency currency    
                                           % change % change    
                                                    in 2016     
 Czech Rep      27.05     27.02   -0.09    -0.18      
 Poland          4.41      4.37   -0.89    -3.41      
 Hungary       309.19    307.32   -0.60    +1.76      
 Romania         4.51      4.50   -0.22    +0.23      
 Serbia        122.90    122.90   +0.00    -1.16      
 Russia            65.87     65.69   -0.28   +10.75      
 Kazakhstan       341.60    338.25   -0.98    -0.32      
 Ukraine           25.58     25.57   -0.06    -6.36      
 South Africa      14.26     14.12   -1.01    +8.40      
 Kenya            101.80    101.60   -0.20    +0.39      
 Israel             3.84      3.83   -0.30    +1.13      
 Turkey             3.26      3.25   -0.40   -10.62      
 China              6.80      6.80   -0.08    -4.58      
 India             67.16     66.86   -0.45    -1.43      
 Brazil             3.39      3.38   -0.18   +16.76      
 Mexico            20.91     20.56   -1.68   -17.90      
 Debt                 Index   Strip Spd  Chg   %Rtn   Index     
 Sov'gn Debt  EMBIG   377         4    .31  7 39.83 1   
 All data taken from Reuters at 10:33 GMT.            
 Currency percent change calculated from the daily U.S.         
 close at 2130 GMT.    

 (Reporting by Helen Reid; Editing by Toby Chopra)
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below