EMERGING MARKETS – The fear of contagion with China Evergrande is taking its toll on all markets

* Emerging Markets Equities, Currencies Hit One Month Low * EM Asia Debt Hit Hit April Low * Watching Cenbank Meetings In US, Brazil & Turkey This Week * Argentine Peso Falls After Fernandez Cabinet Restructures By Susan Mathew 20 Of A Possible Real estate developer China Evergrande defaulted on Monday, sending emerging market bonds on a downward spiral as stocks and currencies saw their largest decline in a month. Also hanging over emerging market assets was the week’s central bank meetings, including Brazil and Turkey, and much-anticipated evidence of the Fed’s expansion of stimulus measures. Declines between 0.2% and 0.8% in Latin American currencies exacerbated the pain for the MSCI index for EM currencies. Brazil’s real remained at the four-week low before a 100 basis point rate cut is expected on Wednesday. Shares in the insolvent Evergrande hit a decade low while Hong Kong property stocks were also hit on Monday. The company has begun paying back investors in its property wealth management products. “I currently see no systemic risk for the global economy from the Evergrande situation,” said David Bahnsen, Chief Investment Officer of the Bahnsen Group. “But there doesn’t have to be systemic risk for markets to be affected because there isn’t enough clarity about how Evergrande’s challenges can impact the global economy and that uncertainty is enough to scare markets.” The cost of securing China against payment defaults soared to nearly an annual high, data from IHS Markit showed. By last week, an Asian high yield metric had fallen to April lows while corporate bonds hit their June 2020 lows. The Chinese markets were closed for a public holiday. Bonds in South Africa, Turkey, Sri Lanka, Costa Rica and El Salvador were all affected. For stocks, those in Chile fell nearly 3%, while stocks in Brazil, South Africa and Poland lost more than 2%, with stocks in Sao Paulo hitting a 6-1 / 2-month low. They were also clearly in the red in Russia, Turkey and Mexico. The heavily controlled Argentine peso fell about 0.2% after President Alberto Fernandez reshuffled his cabinet on Friday after a tug-of-war between more moderate and militant factions within the government that threatened to derail the ruling coalition. Most important Latin American stock indices and currencies at 1414 GMT: Stock indices Last daily change in% MSCI Emerging Markets 1257.24 -1.73 MSCI LatAm 2264.88 -2.4 Brazil Bovespa 108 936.46 -2.25 Mexico IPC 50842.65 -0 .91 Chile IPSA 4354.18 -2.49 Argentina MerVal – – Colombia COLCAP 1313.75 -0.61 Currencies Last daily change in% Brazil Real 5.3266 -0.75 Mexico Peso 20.1496 -0.67 Chile Peso 787.7 -0.67 Colombia Peso 3829.74 -0.12 Peru Sol 4.118 -0.44 Argentina Peso 98.4600 -0.10 (Interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Alexander Schmidt)

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