EMERGING MARKETS-Emerging stocks, FX suffer from softer oil, Qatar rift

By Kitco News / June 06, 2017 / www.kitco.com / Article Link

By Karin Strohecker

LONDON, June 6 (Reuters) - Emerging stocks inched lower and currencies softened on Tuesday, as lower oil and commodity prices and political tensions over a rift between Qatar and fellow Arab nations dampened risk appetite.

MSCI's emerging market equity benchmark snapped a three-day winning streak to fall 0.2 percent, with bourses weakening in Asia, Africa and emerging Europe .

Currencies were also on their back foot with commodity markets under pressure. Iron ore markets suffered and copper prices dipped for a third straight session, weighed down by concerns over slowing growth in China and the United States. "From the bigger picture view, emerging markets just have to grapple with the new normal, China's growth is half of what it used to be, that is impacting oil, copper and iron ore," said Win Thin, global head of emerging market currency strategy at BBH.

"The Gulf countries worry about oil, and so does Latin America. Africa is worrying about iron ore and copper."

Oil prices took another leg lower, now firmly below the $50 per barrel threshold as the rift between Qatar and leading Arab powers fuelled concerns that an OPEC-led push to tighten crude markets looked increasingly frail while soaring U.S. output added to the woes. A number of Arab powers - including Saudi Arabia, Egypt, the United Arab Emirates and Bahrain - severed diplomatic relations with Qatar, accusing Doha of support for Islamist militants and Iran, reopening some old festering wounds. The rift saw Qatar stocks and eurobonds tumble and the cost of insuring its debt against default rise. The Qatari riyal, which is pegged to the dollar, weakened against the U.S. currency in spot and forward markets."Looking ahead it really depends on Qatar and Saudi Arabia getting together and sorting this out, otherwise you can see repercussions not only for oil but also for countries like Turkey," said Simon Quijano-Evans, emerging markets strategist at Legal & General Investment Management.

"There are just too many fires out there at the moment, which need to be quenched," he added.

"The assumption will be that the pegs continue to hold but it's another part of that matrix that becomes uncertain."

South Africa's rand snapped a four-day winning streak to weaken 0.6 percent against the dollar.

Turkey's lira extended losses for a second day, slipping 0.5 percent, while Mexico's peso retreated after jumping nearly 2 percent on Monday, after the governing party clinched a key seat in a state election. However, China's yuan firmed against the dollar after the official midpoint was fixed at a near-seven-month high, shrugging off the central bank's massive $73 billion cash injection into the financial system to ensure liquidity.

For GRAPHIC on emerging market FX performance 2017, see For GRAPHIC on MSCI emerging index performance 2017, see For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see ) Emerging Markets Prices from ReutersEquitiesLatestNet Chg% Chg% Chg

on year

Morgan Stanley Emrg Mkt Indx 1015.15-2.44 -0.24+17.73

Czech Rep 1004.40-3.51 -0.35 +8.98

Poland 2286.06 +10.05 +0.44+17.36

Hungary 34946.29-204.15 -0.58 +9.20

Romania 8665.47-103.94 -1.19+22.31

Greece 783.56-3.01 -0.38+21.74

Russia 1040.37-3.97 -0.38 -9.72

South Africa 46141.40-300.67 -0.65 +5.10

Turkey 98008.55-183.42 -0.19+25.43

China 3102.33 +10.68 +0.35 -0.04

India 31219.26 -90.23 -0.29+17.25

CurrenciesLatestPrevLocalLocal

close currency currency

% change % change

in 2017

Czech Rep 26.32 26.31 -0.02+2.63

Poland 4.194.18 -0.17+5.06

Hungary 307.34307.13 -0.07+0.48

Romania 4.564.56 +0.07-0.57

Serbia 122.19122.06 -0.11+0.95

Russia 56.65 56.59 -0.10+8.15

Kazakhstan 312.90313.01 +0.04+6.63

Ukraine 26.24 26.27 +0.13+2.92

South Africa 12.77 12.70 -0.56+7.52

Kenya 103.25103.30 +0.05-0.85

Israel 3.543.54 -0.04+8.79

Turkey 3.543.52 -0.45-0.34

China 6.806.80 +0.10+2.16

India 64.41 64.35 -0.10+5.48

Brazil 3.303.30 -0.01-1.33

Mexico 18.37 18.34 -0.20 +12.76

Debt Index Strip SpdChg %Rtn Index

Sov'gn Debt EMBIG 320 3.027 91.07 1

All data taken from Reuters at 09:08 GMT.Currency percent change calculated from the daily U.S.close at 2130 GMT.


(Additional reporting by Claire Milhench; editing by Andrew Roche)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities,securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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