LONDON: Emerging market stocks were on track for their fifth straight week in the red on Friday as China shares tumbled to their steepest weekly losses since 2008, their eight-month bull run losing steam fast on tighter regulation and a wave of IPOs.
MSCI's broadest emerging markets stock index fell 0.2 percent on the day and was down 0.4 percent for the week, with investors fretting over the dollar bouncing off Thursday's one-month low, China stocks venturing into correction territory and Greece slowly grinding towards default.
MSCI's broadest index of Asian shares, excluding Japan, edged 0.1 percent lower, with China shares dropping for a second day, plunging more than 6 percent in the session and more than 13 percent over the week. The week-long China sell-off, interrupted only by a feeble bounce on Wednesday, was triggered by fresh government moves to tighten margin financing and worsened by a tidal wave of initial public offerings that sapped liquidity.
Yet stocks are still up 39 percent since the start of 2015. Meanwhile, with Greece's future in the euro zone hanging by a thread, the bloc's leaders scheduled an emergency summit on Monday in an effort to avert a Greek default.
"Greece is seen as a risk for eastern European markets," said William Jackson, an economist at Capital Economics. "(But) there has been some support from the news that there is an emergency summit on Greece scheduled." Stocks in the Czech Republic gained 0.8 percent on the day with Romanian and Serbian peers also up, but Polish and Hungarian indices traded 0.2 percent lower. Bourses across the region were on track for weekly losses.
Currencies painted a mixed picture, with the forint losing 0.16 percent against the euro while others traded flat to slightly higher.
Both the zloty - often seen as a proxy and risk barometer for the region - and the forint were in line for weekly losses.
In Russia, dollar-denominated shares slipped by 2 percent and the rouble weakened by 1.5 percent against the dollar after a tax-fuelled rally earlier in the week, weighed down by oil prices weakening by 1.2 percent on the day.
Economy Minister Alexei Ulyukayev said a preliminary estimate showed Russia's economy contracted by 3.2 percent in the first five months of the year.
Ukrainian eurobonds due in 2017 and 2022 ticked 0.25 cents higher a day before Kiev is due to stump up around $70 million for a coupon payment to Russia, which holds a $3 billion bond maturing in December.
Meanwhile, Sergei Aksyonov, the leader of the Crimean peninsula annexed by Moscow in March last year, said Crimea could issue bonds on Russia's financial markets by the end of the year, according to RIA news agency.
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