* North Korea risk spillover hits Asian markets, emerging
stock index
* Kazakhstan CDS rise, state oil firm bonds fall after
unrest
* Forint under pressure on IMF; 50 bps rate hike expected on
Tuesday
LONDON, Dec 19 (Reuters) – Emerging stocks fell 1.4
percent on Monday to three-week lows, pulled lower by big Asian
market losses after the death of North Korea’s leader, while
political unrest was also in focus in Kazakhstan, triggering a
rise in debt insurance costs.
The MSCI emerging markets index was down 1.4 percent by 1115
GMT, hit by losses in South Korea and Taiwan which together make
up almost a quarter of the index. The death of North Korea’s Kim
Jong-il sent Seoul down 3.5 percent to a three-week closing low
while Taipei shed 2.2 percent. Shanghai, a fifth
of the MSCI emerging index, ended 0.3 percent lower.
Regional debt insurance costs also rose, with South Korea’s
five-year credit default swaps hitting two month highs at one
stage before easing back.
“I think we have seen most of the reaction already, for
instance the Korean won has retraced most of its losses,” said
Thu Lan Nguyen, emerging markets strategist at Commerzbank. “The
main driver for sentiment is still the euro zone crisis.”
Markets recovered slightly in Europe after ECB board member
Christian Noyer said the bank would step to the support of banks
facing liquidity issues. But a two-notch Moody’s
downgrade for Belgium reinforced fears that ratings cuts are
also due for other euro zone sovereigns.
Political risk was also in focus in Kazakhstan where 5-year
credit default swaps surged 8 basis points to a 2-1/2 month high
after protests spread in a troubled oil region. The unrest is
the worst to hit the country in 20 years and has already
resulted in the deaths of 15 people.
Continued…
