Emerging Markets: Stocks fall on virus, China worries; Turkey cenbank decision in focus

ZhongAn Online P & C Insurance

12/08/2021 09:31

By Susan Mathew
    Aug 12 (Reuters) - China's weak lending numbers and
increased business scrutiny, political tensions in Poland, and
central bank decisions in Turkey, Mexico and Peru headlined
emerging market moves on Thursday.
   The MSCI's index of emerging market stocks  .MSCIEF  fell
0.4% as Chinese shares slipped with scrutiny on the online
insurance sector being the latest in a series of crackdowns.
Online insurer ZhongAn  6060.HK  tumbled 11.4%.
 .SS  urn:newsml:reuters.com:*:nL4N2PJ14V urn:newsml:reuters.com:*:nL1N2PJ08V
    Combined with rising COVID-19 cases, worries outweighed a
positive handover from Wall Street where data showing slowing
U.S. inflation growth assuaged fears about a rush to taper
monetary stimulus.  .N 
    As this dented the dollar, riskier currencies caught a break
with an index of EM currencies  .MIEM00000CUS  looking to snap a
four-session losing streak. 
    The Chinese yuan  CNY=  flitted between minor gains and
losses and markets speculated if the fall in new bank loans to
nine-month lows warranted an easing in monetary policy.
 urn:newsml:reuters.com:*:nL1N2PI0SM
    
    A ROCK AND A HARD PLACE
    Turkey's lira  TRY=  was up 0.4% ahead of the 1100 GMT
central bank decision. While President Tayyip Erdogan has called
for a cut in interest rates, inflation has risen to 18.95%, just
shy of the key interest rate at 19%. 
    Analysts expect the bank to stay on hold for at least this
meeting as well.  urn:newsml:reuters.com:*:nL8N2PJ0R7
    "We are approaching the end game, where we would either
witness rate cuts in the coming months, or another direct
intervention from the president," said Tatha Ghose, an FX and Em
analyst at Commerzbank.
    The lira is the worst performing EM currency so far this
year, down 13%, thanks largely to Erdogan's interference in
monetary policy - replacing a hawkish central bank chief earlier
in the year.
    The polish zloty  EURPLN=  was little changed. The currency
had fallen on Wednesday after the country's prime minister
dismissed the head of a junior coalition partner from the
government, creating uncertainty over the future of the
administration.  urn:newsml:reuters.com:*:nL1N2PH1JS
    Meanwhile, lawmakers advanced a bill on Wednesday that the
opposition in Warsaw says aims to silence a U.S.-owned news
channel critical of the government, leading to a swift
denunciation from the United States.  urn:newsml:reuters.com:*:nL1N2PI0F2
    South Africa's rand  ZAR=  fell 0.2%. The outlook for the
currency has turned cautious amid protests and a new finance
minister attempting to revive the economy. 
    Capital Economics, meanwhile, is downbeat about prospects
for commodity currencies.
    "The prices of most commodities have faltered recently and
we expect them to decline further over the next few years –
primarily due to slower growth in China," said Jonathan
Petersen, a market economist at Capital Economics, adding that
higher U.S. Treasury yields will also weigh. 
    
    For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX
    
    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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 (Reporting by Susan Mathew in Bengaluru; editing by Uttaresh.V)
 ((susan.mathew@thomsonreuters.com; +91-80-6287-2704;))