(Bloomberg) -- Emerging-market currencies and stocks retreated as heightened political risk in Turkey and South Korea soured investor appetite for assets in developing nations amid a rout in crude oil.
Tension between North and South Korea and debates on constitutional changes in Turkey sent a developing-currency index lower. The lira sank to a record low as traders tested policy makers' resolve to defend it amid mounting bets on an interest-rate increase. Meanwhile, emerging-market equities had the biggest slump since Dec. 22 as energy shares slid with crude.
“It is a combination of deterioration in sentiment with weaker equities and weakness in oil” that is sending emerging-market currencies and stocks lower, said Georgette Boele, a currency and commodity strategist at ABN Amro NV in Amsterdam and one of the top forecasters for Brazil's real in the past quarter, according to Bloomberg rankings.
Currencies
- The MSCI Emerging Markets Currency Index fell 0.3 percent.
- Turkey's lira tumbled 1.8 percent, extending this year's worst performance among the world's major currencies.
- South Korea's won dropped the most in two months.
- Brazil's real climbed as state oil giant Petroleo Brasileiro SA announced a bond sale.
Stocks
- The MSCI Emerging Markets Index of equities retreated 0.3 percent as oil slumped the most in more than five weeks.
- Saudi Arabia's Tadawul All Share Index declined to a two-week low.
- Mexican shares led losses among major benchmarks in the Americas; Brazil's Ibovespa advanced amid a rally in miner Vale SA.
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- South Korea's Sovereign Credit Risks Jump Most in Four Months
- JPMorgan Sees Mozambique Defaulting on Eurobond Next Week
- Emerging Market ETF Flows Rise for Second Week as Russia Leads
--With assistance from Ben Bartenstein
To contact the reporters on this story: Aline Oyamada in Sao Paulo at aoyamada3@bloomberg.net, Sharon Wrobel in Tel Aviv at swrobel4@bloomberg.net.
To contact the editors responsible for this story: Rita Nazareth at rnazareth@bloomberg.net, Dana El Baltaji at delbaltaji@bloomberg.net.
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