Emerging Markets: Stocks hit by tech selloff ahead of Turkish rate decision

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Today 10:43

China's blue-chip index confirms bear market
IMF sees 1.3% contraction in MENA and Pakistan in 2026
Turkish central bank expected to restart easing cycle
Ukrainian bonds continue climb on prospects of peace talks
Indonesian stocks gain after regulator makes market reforms 
By Sudeshna Ghoshal and Johann M Cherian
Oct 22 (Reuters) - MSCI's emerging market stocks gauge fell on Thursday, with China's blue-chip index confirming a bear market, hit by tech shares and higher oil prices as investors evaluated Indonesian market reforms ahead of Turkey's central bank decision.
The emerging markets index .MSCIEF tumbled 2.3% to its early August low, weighed down by sharp declines in South Korea .KS11, Taiwan .TWII and Hong Kong .HSTECH. China's blue-chip CSI300 index .CSI300 sank to a 15-month low on Thursday, marking a 20% drop from its record high, which by some definitions would point to a bear market.
Analysts pointed to a myriad of factors including fresh spending concerns following US-based Meta's META.O plans to raise capital, some signs of profit-taking following a strong rally earlier this year and geopolitical tensions. 
Crude prices jumped 3% to $112 a barrel after more Houthi attacks in Saudi Arabia and Iranian media reports of explosions in the southern region of the country.   
The International Monetary Fund forecast a 1.3% contraction in economic output in the Middle East, North Africa and Pakistan this year as a result of the conflict. 
Against this backdrop, net oil importer Turkey's central bank is expected to announce its decision on interest rates, with economists expecting policymakers to resume their easing cycle with a 100-basis-point cut later in the day. 
"September's inflation data provided a positive signal, while developments in investment funds point to downside risks for the economy in the final quarter," Frantisek Taborsky, an EMEA FX & FI strategist at ING, said.
"The authorities' swift response appears to have contained the fund shock, with no signs of systemic risk or a sharp rise in dollarisation, while foreign inflows have resumed."
The lira TRY= was flat against the dollar, while stocks .XU100 dipped 0.5%. The country has been under scrutiny from index provider MSCI over concerns about opaque trading practices, concerns around which sparked a selloff last month.
Currencies of other net energy importers weakened, with South Africa ZAR= and India INR= down 0.7% and 0.4%, respectively.
South Africa announced another two months of fuel relief on Wednesday as part of its mid-year budget review. 
The benchmark bond ZAR2035= dipped after a strong rally in the previous session after the government launched a bond buyback programme and trimmed weekly bond auctions to show fiscal discipline.
Indonesia, another country under scrutiny by MSCI, announced reforms including sanctions on parties found to have violated trading rules and the exclusion of companies with high shareholding concentrations from the benchmark stock exchange. 
Local equities .JKSE gained 1%, marking their third-straight day of recovery from a sharp selloff last week.     
Geopolitical tensions were also high between Russia and Ukraine. However, following a recent visit from US special envoy Steve Witkoff, investors were hopeful that chances for a resolution were still alive.
Kyiv's international maturities in 2034 XS2895056369=TE and 2036 XS2895057177=TE were marginally higher and were up for their third-straight day.

 (Reporting by Sudeshna Ghoshal in Bengaluru; Editing by Andrew Heavens)
 ((Sudeshna.ghoshal@thomsonreuters.com))