LONDON: Emerging equities slipped for a third day on Thursday, with Chinese mainland shares posting their biggest one-day loss in a month, while the South African rand extended the previous day's 3 percent fall.
MSCI's benchmark emerging equity index slipped 0.3 percent, led by China's 6 percent tumble and Hong Kong with a 1.6 percent loss. Local traders attributed the fall to profit-taking from the market's 10 percent bounce over the past month amid continued economic gloom.
The high volatility in stock markets since the start of the year and the global economic slowdown will be key discussion topics for G20 finance chiefs and central bankers meeting in Shanghai on Friday and Saturday.
The South African rand weakened another 0.75 percent against the dollar after falling off two-month highs on Wednesday when an austere budget failed to reassure investors.
But government bonds clawed back some of Wednesday's losses after Finance Minister Pravin Gordhan promised more spending cuts if economic growth remains below 1 percent.
Yields on 2026 benchmark bonds fell around 10 basis points .
The budget was not too disappointing on paper, but the assumptions for economic growth were too optimistic, said TD Securities strategist Cristian Maggio.
"They are walking a tightrope and any slippage on the growth front or misjudgement on the inflation path may translate into a wider deficit than expected," he said. "The market would have liked to see a much bigger buffer built into the budget."
The South Korean won fell to its lowest close in almost six years after data showing consumer sentiment at eight-month lows in February. This raised expectations of an interest rate cut in March.
The Indian rupee slipped half a percent, close to a record low touched in August 2013, after India's railway budget was seen as disappointing, despite a 21 percent capital spending hike.
Indian bonds also slumped, with yields on the most-traded 2020 issue rising to almost 8 percent, a 5-1/2-month high, and up 6 basis points from before the presentation of the railway budget.
The government is due to unveil its fiscal budget on Monday.
Bourses in eastern Europe firmed, with Prague and Budapest up more than 1 percent. Russian dollar-denominated stocks also rallied around 1 percent.
The Russian rouble weakened 0.7 percent, pressured by lower oil prices.
Ukraine's bonds did not react much to a Russian statement saying Kiev had until March 4 to respond to its lawsuit over a $3 billion Eurobond debt.
Argentina's 2033 dollar bond firmed slightly after the country edged closer to a deal with major creditors suing it over defaulted bonds.
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