* S.African rand hits two-week low<\/p>\n
* Average yield for EM local currency bonds at April 2020 high<\/p>\n
* Polish zloty slips on central bankers\u2019 views on rates<\/p>\n
Sept 16 (Reuters) – Emerging market stocks fell 0.8% on Thursday, putting them on course for their worst week in a month on investor fears of contagion from a potential downfall of embattled Chinese property developer Evergrande.<\/p>\n
Shares in China\u2019s no. 2 property developer lost 6.4%, taking losses so far this week to near 30%, after it applied to suspend trading of its onshore corporate bonds following another downgrade.<\/p>\n
Hong Kong stocks dropped to their lowest this year, and mainland shares gave up more than 1% as other property stocks also sold off.<\/p>\n
MSCI\u2019s index of EM shares has fallen every day this week due to China\u2019s increasing business regulations, weak economic data and Evergrande woes.<\/p>\n
Given that the impact on China\u2019s credit market has been focused on the property sector and only on those names that have had trouble raising funds, the impact on other sectors as well as broader emerging markets should be limited, said Eugenia Fabon Victorino, head of Asia strategy at SEB in Singapore.<\/p>\n
\u201cBut it would really depend on how this is resolved. Historically the resolution of defaults in China has been quite fast although there has been a process wherein the domestic stakeholders have a limited fallout,\u201d she said.<\/p>\n
\u201cLimiting that will also limit the risk of this becoming a systemic risk… The big banks in China are comfortably above the regulatory capital ratios, and should be able to take the hit.\u201d<\/p>\n
Elsewhere, Russia\u2019s rouble fell slightly after hitting 11-week highs on Wednesday. Russian President Vladimir Putin said he would have to spend \u201ca few days\u201d in self-isolation after dozens of people in his entourage fell ill with COVID-19, the TASS news agency reported.<\/p>\n
Turkey\u2019s lira was flat. Turkey\u2019s central bank said it has formed a platform to expand research into the potential benefits of a digital currency, with results to be announced in 2022.<\/p>\n
South Africa\u2019s rand dipped to two-week lows, extending declines after a drop in July retail sales added to evidence that the economy got off to a shaky start in the third quarter.<\/p>\n
The Polish zloty hit two-week lows as investors digested statements regarding the direction of interest rates in the country. One central banker saw a likely rise while another said a hike was not necessary at this point. Earlier this month, the central bank left the key rate unchanged at 0.1%.<\/p>\n
In the debt market, the average yield for EM local currency bonds is now almost 5.1%, the highest since April 2020.<\/p>\n
For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs\/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs\/2OusNdX<\/p>\n
For TOP NEWS across emerging markets<\/p>\n
For CENTRAL EUROPE market report, see<\/p>\n
For TURKISH market report, see<\/p>\n
For RUSSIAN market report, see<\/p>\n