Emerging Markets: Stocks fall, FX muted as central bank-heavy week looms

Quanta Computer

22/01/2024 09:50

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      China moves to support yuan - sources
    

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      IMF to discuss Egypt's $3 bln loan program
    

        * 
      Poland wage growth, retail sales below forecasts in Dec
    

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      EM stocks down 0.6%, FX flat
    

  
    By Amruta Khandekar
       Jan 22 (Reuters) - Emerging market stocks were dragged
lower on Monday by concerns about China's shaky economic
recovery while currencies were subdued at the start of a week
brimming with interest rate decisions from regional and major
central banks.
    MSCI's index for emerging market equities  .MSCIEF  fell
0.6% by 0932 GMT following two straight days of gains. A measure
of regional currencies  .MIEM00000CUS  was steady as the dollar
struggled to hold on to recent gains.
    After fading optimism around the likelihood of early U.S.
interest rate cuts depressed sentiment towards risk-sensitive EM
assets for most of last week, investors are on guard ahead of
policy decisions from countries including South Africa and
Turkey.
    The European Central Bank (ECB) and the Bank of Japan are
also due to give their verdicts on rates this week.
    China's blue-chip index  .CSI300  fell 1.6%, while the yuan
 CNY=CFXS  held steady against the dollar after the People's
Bank of China (PBOC) kept benchmark lending rates unchanged at
their monthly fixing.
    China's major state-owned banks moved to tighten yuan
liquidity in the offshore foreign exchange market on Monday,
four sources with knowledge of the matter said.
    China's disappointing economic growth "is a drag on overall
EM sentiment", said Jon Harrison, managing director of emerging
market macro strategy at TS Lombard.
    "Overall, we prefer LatAm (Latin America), especially
Brazil. The ongoing monetary easing will raise consumer
sentiment and boost equity markets, which remain undervalued
despite the gains late last year."
    Stocks in Taiwan  .TWII  remained a bright spot, rising 0.8%
as technology shares received a boost from optimism around
artificial intelligence.
    Such enthusiasm, sparked by Taiwanese chipmaker TSMC's
upbeat forecast had also pushed the benchmark U.S. S&P 500
 .SPX  index to a record high on Friday.
    The South African rand  ZAR=  and the Israeli shekel  ILS= 
dipped 0.9% and 0.7% against the dollar respectively.
    Saudi Arabia's sovereign wealth fund, the Public Investment
Fund (PIF), has given initial price guidance for its
benchmark-sized, dollar-denominated triple-tranche bonds, a bank
document showed on Monday.
    An International Monetary Fund team is currently in Cairo to
discuss Egypt's $3 billion IMF loan and reform program, an IMF
spokesperson said on Friday.
   
    HIGHLIGHTS
    ** Quanta Computer  2382.TW  biggest boost to Taiwan's stock
index
    ** Malaysia's Dec CPI rises 1.5%, Morocco's annual inflation
drops to 6.1% 
    ** Indian markets closed for public holiday
        
    For TOP NEWS across emerging markets  urn:newsml:reuters.com:*:nTOPEMRG
    For CENTRAL EUROPE market report, see  CEE/ 
    For TURKISH market report, see  .IS 
    For RUSSIAN market report, see  RU/RUB 

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For GRAPHIC on emerging market FX performance in 2024    http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2024    https://tmsnrt.rs/2OusNdX
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 (Reporting by Amruta Khandekar, editing by Ed Osmond)
 ((Amruta.Khandekar@thomsonreuters.com;))