Stocks, currencies feel nerves over Trump

A woman walks by an electronic stock board of a securities firm in Tokyo. AP Photo/Koji Sasahara

A woman walks by an electronic stock board of a securities firm in Tokyo. AP Photo/Koji Sasahara

Published Jan 16, 2017

Share

London - Emerging stocks registered their

biggest daily fall in nearly a month on Monday and currencies

broadly weakened with Turkey's lira falling again as investors

showed nerves ahead of President-elect Donald Trump's

inauguration.

MSCI's emerging stock index fell 0.7 percent with

some heavyweight exchanges in Asia such as Hong Kong,

Taiwan down around 1 percent while bourses in Russia

and Poland slipped 0.5 percent.

Currencies fared little better. Turkey's lira led the

falls against the dollar, weakening by 1.3 percent and extending

losses since the start of the year to 6.3 percent.

The currency weakened despite the central bank effectively

closing off two of its lira funding taps and forcing banks to

use its "late liquidity window" in an effort to stem the falls

while the government said it expected the central bank to act

and volatility to fade.

"These tools potentially make what is already a convoluted

monetary policy set up more complicated," said William Jackson,

senior emerging market economist at Capital Economics, adding

that the difficulty in gauging monetary policy stance had been a

frequent concern for investors.

"There are fundamental reasons why the Turkish lira should

weaken with US policy set to tighten and domestic political

concerns...Also, it's an economy with an entrenched high wage

growth, high inflation problem," he said, adding he expected the

central bank to hike interest rates at a meeting on January 24.

Turkish assets have been roiled by worries over its big

external financing needs, political reforms, a lacklustre

economy and security threats.

South Africa's rand nearly matched the losses,

weakening by more than 1 percent and chalking up the biggest

daily fall in 10 days. Mexico's peso slipped 0.7 percent.

Across emerging Europe, currencies weakened against the

euro. Serbia's dinar slipped 0.2 percent despite the

central bank intervening once again to prop up the

dinar.

And in eurobond issuance, Argentina started its investor

roadshow, aiming to sell $3-5 billion just nine months after it

sold $16.5 billion in its return to capital markets. Egypt is

also meeting investors in what could be a bumper week for

issuance from emerging market countries.

Meanwhile Mozambique said it would not pay the coupon due on

January 18 for its 2023 eurobond citing its

deteriorating economic and fiscal situation as the country is

edging closer to default.

REUTERS

Related Topics: