LONDON, Feb 9 (Reuters) - Emerging equities were set for their worst week since September 2011 on Friday, posting a seventh straight day in the red with Chinese bourses sharply lower as the global stocks rout continued.
MSCI's benchmark emerging stocks index fell 1.7 percent on the day, hitting its lowest since late-December, and on track to end the week down 7 percent. The index has now turned negative on the year.
No bourse could escape the carnage following another big sell-off on Wall Street overnight where the Dow Jones plunged 4.1 percent and the S&P 500 3.7 percent.
William Jackson, senior emerging markets economist at Capital Economics, said there could be more pain ahead if Wall Street opened weaker again today.
"Some of the EM asset valuations are relatively high and credit spreads are very tight so there could be scope for more correction," he said. "But what we would be more concerned about from an EM perspective is a sharper rise in global interest rates triggered by concerns about inflation."
Chinese mainland shares led the losses, tumbling 4.3 percent to their lowest since August 2017. The blue chip index was down 10 percent on the week, its worst weekly fall since August 2015.
Chinese inflation eased as expected in January, which could support the view that the world's second-largest economy is slowly starting to lose momentum.
China's yuan steadied after Thursday's fall, firming 0.4 percent, but looked set for its first weekly loss in two months as demand for dollars increased ahead of the long Lunar New Year holidays.
The revival of an outbound investment scheme after a two-year hiatus has also weighed on the yuan.
Hong Kong shares plunged 3.1 percent, set to end the week down 9.5 percent, their worst week since October 2008, while index heavyweight South Korea fell 1.8 percent.
In Emerging Europe the biggest fallers included Russia and Turkey, both down over 1 percent and racking up weekly losses of around 4 percent.
South African stocks fell 1.3 percent and were set to end the week down 5 percent, their worst since January 2016 as the waiting game with President Jacob Zuma continued.
ANC leader Cyril Ramaphosa has cleared his diary for Friday, fuelling speculation he is making a final push to force Zuma to step down. The rand firmed 0.4 percent, having slipped to a three-week trough overnight.
South African dollar bonds fell as much as 1 cent across the curve and the average yield spread of South African sovereign bonds over U.S. Treasuries on the JPMorgan EMBI Global Diversified widened out by 9 basis points (bps) to 240 bps, the highest since early January.
South African five-year credit default swaps also rose 4 bps from Thursday's close to 159 bps, according to IHS Markit data, the highest since late-December.
The Russian rouble was 0.6 percent firmer, off a 1-1/2 month low ahead of a central bank meeting at which it is expected to cut rates by 25 bps to 7.5 percent.
However, some analysts see the possibility of a deeper 50 bps cut. "The weakness in the inflation data, some of the weakness in the hard activity data and the relatively dovish comments from the central bank governor mean there might be scope for a larger cut," said Jackson.
For GRAPHIC on emerging market FX performance 2018, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2018, see http://tmsnrt.rs/2dZbdP5
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Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 1143.32 -19.77 -1.70 -1.31 Czech Rep 1107.00 -10.32 -0.92 +2.67 Poland 2399.49 -6.99 -0.29 -2.51 Hungary 38737.90 -138.03 -0.36 -1.62 Romania 8047.22 -20.34 -0.25 +3.79 Greece 829.77 -11.61 -1.38 +3.41 Russia 1194.71 -15.98 -1.32 +3.49 South Africa 49248.80 -685.99 -1.37 -6.25 Turkey 13012.65 -1250.88 -1.09 -2.01 China 3130.93 -131.12 -4.02 -5.33 India 33980.85 -432.31 -1.26 -0.22 Currencies Latest Prev Local Local close currency currency
% change % change
Czech Rep 25.32 25.36 +0.19 +0.83
Poland 4.20 4.19 -0.16 -0.52
Hungary 311.82 311.29 -0.17 -0.41
Romania 4.64 4.65 +0.21 +0.73
Serbia 118.42 118.54 +0.10 -0.02
Russia 58.05 58.40 +0.59 -0.68
Kazakhstan 327.51 325.96 -0.47 +1.62
Ukraine 27.03 27.08 +0.18 +4.13
South Africa 12.11 12.16 +0.42 +2.05
Kenya 100.90 100.70 -0.20 +2.18
Israel 3.52 3.52 +0.02 -1.06
Turkey 3.82 3.82 -0.01 -0.84
China 6.30 6.32 +0.38 +3.31
India 64.32 64.29 -0.05 -0.76
Brazil 3.29 3.29 -0.00 +0.80
Mexico 18.83 18.89 +0.33 +4.33
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 307 2 .21 7 91.34 1
(Editing by Matthew Mpoke Bigg)