Emerging equities hit two-week lows yesterday, weighed down by global politics, the prospect of higher US interest rates, a retreat in tech stocks and weak Chinese property shares.
With the dollar index making gains and US 10-year yields just off six-week highs, MSCI emerging equity benchmark fell 0.8% for its third straight session in the red and the steepest daily decline in more than six weeks.
Falls were led by bourses in Asia, where heavyweight Hong Kong tumbled 1.3% and Chinese mainland stocks fell 0.5% led by property firms after some cities imposed new housing curbs on the overheated market.
Taiwan’s index tumbled more than 1% while South Korea eased 0.4%. Losses in both markets were led by tech stocks.
MSCI’s emerging market tech index has risen more than 50% since the start of the year compared to a 27% rise in the overall emerging benchmark.
But the index has felt some pressure after a selloff in Apple earlier this month. 
“Consolidation in Apple shares has also caused a pause in the sharp ascent in emerging market equities as tech has contributed around 50 % of the emerging equity rally this year,” said UBS strategist Manik Narain.
“But broadly speaking we see no major shakes in emerging markets this is just a brief pause in the rally.”
Adding to the sombre mood was some uneasiness across global markets following Sunday’s German election, which saw Chancellor Angela Merkel secure a fourth term in power yet face a fractured parliament as support for the far-right surged. And markets were still digesting last week’s meeting of the US Federal Reserve, which saw the bank leaving interest rates unchanged but signalling it would stick to rate hikes despite a recent bout of low inflation.
“We have seen some pressure on the front end of the US yield curve and G10 data judging from flash PMIs has been very strong so that’s led EM to come off a bit,” said Narain.
On currency markets, China’s yuan fell 0.3% to the weakest level in nearly four weeks, slipping through the psychologically important 6.6 to the dollar level.
Turkey’s lira, sensitive towards US interest rate moves, racked up some of the biggest falls, weakening 1%. 
Prime Minister Binali Yildirim said Turkey was evaluating economic, political, diplomatic and military steps in response to the Iraqi Kurdish independence referendum.