BREAKING - Emerging Market Assets Extend Drop as Bets Shift to Trump Win

(Bloomberg) - Emerging-market stocks and currencies hastened a decline as U.S. election tallies so far suggested the outcome of the presidential election will be closer than polls had predicted.

The benchmark currency gauge fell 0.5% and the equity index declined 0.6% alongside a slide in U.S. equity futures. The Mexican peso, seen as a key election proxy, fell more than 3% against the Dollar, taking the South African rand down more than 1%. The offshore Yuan, a key barometer of U.S.-China relations, weakened 1% after gaining by as much 0.5% earlier amid speculation Democratic nominee Joe Biden would emerge victorious.

“We are going to see the market continue to swing from joy to sorrow as the exit polls come out for a while,” said Tsutomu Soma, a bond trader at Monex Inc. in Tokyo. The emerging-market proxy assets will see the wildest moves as the vote unfolds, he said.

Stocks have rallied this week amid speculation a Biden victory, and potential Democratic sweep of the Senate and House of Representatives, would allow lawmakers to pass a large U.S. stimulus plan and may reduce geopolitical uncertainty. The JPMorgan (NYSE:JPM) Emerging Market Volatility Index, a measure of price fluctuations in developing-nation currencies, rose to the highest level since late September on Tuesday.

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