Emerging markets fell on Thursday as caution on the economy from U.S. Federal Reserve and disappointment at a lack of new stimulus from the Bank of Japan added to nerves already frayed by Brexit fears and a relapse in oil prices.
MSCI's emerging market stocks slipped 1 percent close to a three-week low hit on Wednesday. The index provider's eastern European benchmark tumbled 1.8 percent, taking its losses over the last week to almost 8 percent.
Asian bourses also saw steep declines, with Hong Kong dropping more than 2 percent. Concerns that Britain may vote to leave the European Union in a referendum on June 23 have dominated markets this week, with investors ditching riskier emerging market assets in favor of safe-haven assets such as German government bonds. The atmosphere grew even more cautious when the Fed kept interest rates on hold while predicting slower economic growth on Wednesday and the Bank of Japan refrained from taking further stimulus steps.
"It is just a question of wait another week and see what happens in the Brexit vote," said Commerzbank chief EM strategist Simon Quijano-Evans. "Everything is being put hold, whether it is investors, central banks, politicians. Everyone is just waiting now."
A relapse in oil prices to close to $48 a barrel further added to the pressure, and there was no solace in a second day of declines for the dollar. Russia's ruble and South Africa's rand weakened 0.5 percent against the greenback.
Turkey's lira slipped 0.3 percent and stocks matched that fall. Deputy Prime Minister Mehmet Şimşek told Reuters it was in Turkey's interest to remain anchored to Europe and said parliament would discuss a major bill to enhance the investment climate in coming weeks.
Investors were also waiting on a central bank meeting in Egypt, with forecasters roughly split on whether it would raise or hold rates after a jump in inflation in May.
Brexit worries were also again felt across eastern Europe - the region with the most direct economic links not only with Britain but also with the eurozone. Stocks in Poland lost as much as 2 percent to trade at their lowest in two months, while shares in Hungary slipped 1 percent. The zloty slipped 0.3 percent against the euro while Hungary's forint almost matched that fall, both hitting their weakest level in three weeks. Implied volatilities also nudged back up.
In Croatia, the cost of insuring exposure to Zagreb's debt through credit default swaps jumped to its highest level in more than two months ahead of a no-confidence vote that could spell the end of technocrat Prime Minister Tihomir Oreskovic's government.Among the few more positive markets, Nigeria's stock market opened at its highest level in two weeks after the central bank said on Wednesday it would switch to a purely market-driven FX regime next week. "I think the move does show there is some rethink by the policymakers in Nigeria so I think markets see it is a positive. The most important thing was to stop the drain of the FX reserves," Commerzbank's Quijano-Evans said.