Emerging Markets on ‘tenterhooks’ as Chinese selloff deepens

By: | Published: June 28, 2018 12:42 PM

The rout in emerging markets deepened as investors sifted through the latest remarks from the Trump administration on protectionist measures, with both currencies and stocks on pace for their worst quarter since September 2015.

stock market USA, stock market China, stock market share market, emerging markets, USA shares, China shares, Donald Trump, Global MarketThe rout in emerging markets deepened as investors sifted through the latest remarks from the Trump administration on protectionist measures, with both currencies and stocks on pace for their worst quarter since September 2015. (Reuters)

The rout in emerging markets deepened as investors sifted through the latest remarks from the Trump administration on protectionist measures, with both currencies and stocks on pace for their worst quarter since September 2015.

Every developing-nation currency tracked by Bloomberg retreated and a measure of shares extended a three-day drop to 3.6 percent. The Chinese yuan traded offshore slid for a 10th straight day in the longest losing streak since March 2014, while the Hungarian forint sank to a record low as the central bank maintained a dovish monetary stance. Argentina’s Merval led global equity declines after disappointing economic data. The risk premium on sovereign bonds over U.S. Treasuries widened.

“Global markets remain on tenterhooks,” according to Shireen Darmalingam, a macro-economic strategist at Standard Bank Group Ltd. in Johannesburg. “Fresh tensions between the U.S. and China continued to damage sentiment and risk appetite for emerging-market assets.”

Investors fret over how a trade war between the world’s two biggest economies could curb growth at a time when the Federal Reserve is accelerating its rate hikes and oil edges higher. While President Donald Trump suggested his administration wouldn’t seek a hard line against Chinese investments, his top economic adviser Larry Kudlow said the talk doesn’t amount to the U.S. retreating in its approach on trade. A leaked report from a Chinese government-backed think tank warned of a potential “ financial panic.”

“The volatility we’re seeing in the yuan could reverberate across the rest of emerging markets given the size of the Chinese economy as well as the economic and financial linkages across the region,” said Dushyant Padmanabhan, a currency strategist at Nomura Holdings Plc in Singapore.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition