Emerging stocks hit one-month low

People look at an electronic stock board of a securities firm in Tokyo. AP Photo/Koji Sasahara

People look at an electronic stock board of a securities firm in Tokyo. AP Photo/Koji Sasahara

Published Dec 22, 2016

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London - Emerging stocks hit a one-month

low on Thursday though currencies delivered a mixed performance

as the dollar pulled away from its 14-year high, with Russia's

rouble hitting the strongest level in over a week.

MSCI's emerging market index fell 0.8 percent,

having chalked up losses in six of the past seven sessions, with

bourses in Russia , Taiwan, India

and Hong Kong all down around 1 percent.

Yet South Africa's rand and Russia's rouble

strengthened 0.5 percent against the dollar, which edged

lower after hitting a 14-year high on Tuesday.

And US 10-year Treasury yields, a reference point for

emerging market debt, also eased after hitting a more than

two-year high in the wake of last week's Federal Reserve

meeting.

"[It's] a relatively calm backdrop in U.S. dollar and U.S.

Treasuries ahead of the Xmas weekend as oil attempts to find

'comfortable' levels," Simon Quijano-Evans, a strategist at

Legal & General Investment Management, told clients.

Yet other currencies struggled. China's yuan slipped

0.1 percent, weighed down by corporate dollar demand as

persistent downward pressure on bets of more losses offset a

firmer midpoint.

South Korea's won hit a more than nine-month low and

the Taiwan dollar touched a near five-month trough.

"Korea's won [is] clearly suffering from the openness of its

economy and thus vulnerability to global trade risks, economic

underperformance due to corporate issues and strikes, and

political noise that culminated in the impeachment of president

Park (Geun-hye)," said Quijano-Evans.

In Saudi Arabia, the government was expected to release the

budget for 2017, which will boost spending to support economic

growth while raising domestic energy prices to ease the

government's subsidy burden, according to sources.

Investors were also watching out for central bank meetings,

with policymakers in the Philippines keeping interest rates

steady at 3.0 percent as expected.

Central bankers will also meet in Czech Republic, where no

change is expected.

"It could be interesting to see any possible comments

regarding the timing of the exit from the current currency

regime that keeps the exchange rate at slightly above

27, because of the recent, surprising increase in inflation,"

Erste Group analyst Zoltan Arokszallasi wrote in a note.

REUTERS

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