Reuters/London

A raft of weak economic data kept emerging assets on the ropes yesterday, with stocks extending August’s heavy losses and central banks scrambling to control currencies’ relentless slide against the dollar.
Data showed Chinese and Taiwanese manufacturing contracted at the fastest pace in three years while South Korean exports fell the most in six years, reflecting weakness within emerging economies as well as their overseas markets.
Emerging stocks fell 1.5%, after drops of between 1 and 2% in Chinese, Korean, Taiwanese and Indian shares, while an oil price pullback hit Gulf and Russian markets.
The emerging index fell 9% in August, the worst monthly loss since May 2012.
Currencies hovered near multi-year lows against the dollar, though Asian units were lifted by a Chinese move to tighten rules on yuan forward trading. The move raised offshore-traded yuan 0.4% to a two-week high.
Currencies such as Malaysian ringgit and Korean won rose as much as 1% after the report but were not expected to advance further due to weak growth and investor flight from emerging markets.
“We’ve had a wide range of data all of which is showing that despite what many perceived to be tailwinds for emerging markets - lower oil prices and improvements in developed economies - we are not seeing any pick-up in growth,” said UBS strategist Manik Narain.
“The data also shows exporters having to cut export prices... all that shows weakness in emerging equities and currencies is likely to persist.”
Morgan Stanley advised clients to trim emerging equity allocations, predicting an 11% year-on-year fall in earnings per share (EPS) and only modest recovery in 2016.
They reiterated a preference within the sector for companies with dollar revenues and local cost bases due to weak emerging currencies.
Central banks have resorted to various measures to stem currency volatility, with Turkey on Monday raising reserve ratios on banks’ short-term forex borrowing.
The lira showed little reaction, standing 3% off record lows hit a week ago.
But Turkish shares fell 1% as political risk escalated. Losses were led by conglomerate Koza Ipek , which fell more than 10% after police raids on the company linked to dissident cleric Fethullah Gulen .
With elections set for November, Turkey’s economy has also slowed, with manufacturing contracting in August for the sixth month out of the last eight.
Central European manufacturing too slowed in August, with Poland at 11-month lows, Hungary’s under long-term averages and Czech PMI also below forecast.
Polish and Hungarian stocks were down almost 2%  while currencies weakened versus the euro .
Russian markets posted bigger losses, with the battered rouble down 2.5%.
South African stocks, also heavily geared to China, fell 1.5% while the rand lost 0.3% to the dollar.