Emerging market stocks slipped on Thursday, with Asian bourses under heavy selling pressure as optimism about China's reopening from COVID-19 restrictions gave way to fears about the spread of the virus globally.
The JSE's All-Share index declined 1.5% by lunchtime, with large losses in mining shares like Anglo Platinum (-5%) and Implats (-3%).
The MSCI's EM equities index slipped 0.4%, set to wipe out two days of relative optimism over China's dismantling of its zero-COVID policy.
Stock markets in Shanghai, Hong Kong, Taipei and Seoul fell in the range of 0.4% and 1.9%. In its final trading day of the year, South Korea's benchmark KOSPI recorded a 25% loss in 2022, its worst yearly performance since 2008.
"The bad news with China's reopening is that it will not only boost global growth, but also energy and commodity prices - hence inflation, the interest rate hikes from central banks and potentially the global COVID cases," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The re-opening raises the prospect of Chinese tourists returning to shopping streets around the world but the United States, India, Italy, Japan and Taiwan said they would require COVID tests for travellers from China.
Adding to the glum mood, Russia fired more than 100 missiles into Ukraine on Thursday, targeting the capital Kyiv where three people were wounded, the northeastern city of Kharkiv, and other cities in a large-scale bombardment, Ukrainian authorities said.
The Russian rouble recovered slightly after hitting an eight-month low against the dollar earlier on concerns that Western sanctions on Russian oil and gas may limit export revenues.
The rouble strengthened by 0.6% to 71.74 per dollar, having earlier touched 72.92, its weakest since April 27.
Overall, EM currencies found breathing space as the dollar slipped. The South African rand, the Hungarian forint and the Polish zloty rose in a range of 0.1% and 0.6%.
Emerging market economies have witnessed sharp capital outflows this year, spurred by a toxic mix of aggressive interest rate increases, a strong dollar and soaring inflation caused by Russia's invasion of Ukraine as well as disruption caused by the pandemic.
The EM equities index is set to clock annual declines of over 22%, its worst performance since the financial crisis in 2008, with stocks in eastern Europe at the sharp end of the selloff. The JSE declined almost 1% in 2022.
Its currencies counterpart, with a 4.4% decline, is set for its worst year since 2015 when a crash in commodity prices and slowing economic growth knocked many emerging assets.
Meanwhile, returns on emerging market sovereign debt spreads, the premium that investors demand for holding riskier security than U.S. Treasuries, is down 17.6% this year, according to JPMorgan.