<ul>
<li>EM stocks down 1.4%, FX down 0.5%</li>
<li>Romania approves 2026 budget plan with 6.2% deficit target</li>
<li>Polish president vetoes EU defence loan bill</li>
</ul>
By Pranav Kashyap
March 13 (Reuters) - Emerging market assets are on track to log a second consecutive week of losses on Friday, as investors continued to flee riskier bets, with no clear end in sight to the Iran war. The MSCI index for emerging market equities (.MSCIEF) fell 1.4% on the day, taking the weekly loss to nearly 2%. A similar index tracking emerging market currencies (.MIEM00000CUS) slipped 0.5%, setting it up for a weekly decline of about 0.6%.
Equities in Mumbai (.BSESN) and Istanbul (.XU100) each dropped more than 1%, while Seoul (.KS11) slid 1.7% and Bangkok (.SETI) lost 1.5%.
U.S. President Donald Trump lashed out at Iran’s leadership, calling them “deranged scumbags” and saying it was his “great honor” to kill them, as the conflict in the region neared the two-week mark amid sustained barrages of drone and missile strikes.
In Tel Aviv, stocks (.TA125) were on course for their worst week since October 2023. Markets in Dubai (.DFMGI) and Doha (.QSI) were also under heavy strain, with both set to post a fourth consecutive week of losses as the regional fallout intensified.
Governments around the world have spent the week scrambling to cushion the shock from violent swings in energy prices. New Delhi invoked emergency measures to tackle supply shortages, Poland turned to financial tools to blunt the impact, and Brazil removed taxes on diesel while imposing levies on oil exports.
In central and eastern Europe, Romania’s leu (EURRON=) was flat, while the country’s benchmark equity index (.BETI) fell 0.3%. The government approved a 2026 budget targeting a deficit equal to 6.2% of economic output - a figure still well above the European Union’s fiscal ceiling of 3% of GDP.
Turkish equities (.XU100) , which began the year on a strong footing, have since drifted into slight declines. The shift in momentum comes as recent inflation data points to a loss of steam in the disinflation trend, with higher energy costs further clouding the outlook. The country, Iran’s neighbour, is now expected to see consumer inflation reach around 25% by year-end. That came a day after Turkey’s central bank paused its easing cycle once again, citing market turbulence from the conflict. S&amp;P Global Ratings also said the Iran-driven spike in oil prices would be a negative for the country.
“Inflation fears are prevailing and yields are climbing, but we think the latter will only increase by a small amount if equity investors start to seek safe havens. Above all, we view all these effects as temporary,” said Joost van Leenders, senior investment strategist at Van Lanschot Kempen.
Later in the day, the rating agency was also expected to review Saudi Arabia’s A+ credit rating with a stable outlook.
Elsewhere, the Polish zloty (EURPLN=) edged slightly higher, though stocks (.WIG20) fell 1% as markets absorbed news that the country’s president had declined to sign legislation establishing a mechanism to deploy 43.7 billion euros ($50.04 billion) in European Union loans aimed at strengthening the military.
($1 = 0.8733 euros)

EEMS

AVEM

- Emerging market stocks dropped 1.4%, with further losses expected as investors shy away from risk in the context of ongoing conflicts.  
- Romania approved a 2026 budget plan targeting a deficit of 6.2%, exceeding the EU's 3% cap, while Poland's president vetoed an EU defense loan bill.  
- Market pressures were noted across various regions, with Turkey experiencing a slight decline following inflation concerns and rising energy costs, impacting its previously strong stock performance.

Reuters

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