EMERGING MARKETS-Stocks look to mark positive end to brutal week

Emerging market stocks rose on Friday for the first time this week, as Chinese equities recovered after a bruising week, although worries about a likely default by indebted property developer Evergrande kept a lid on gains. MSCI's index of EM shares hit a three-week low earlier in the session before recouping.


Reuters | Updated: 17-09-2021 14:38 IST | Created: 17-09-2021 14:04 IST
EMERGING MARKETS-Stocks look to mark positive end to brutal week
Representative Image Image Credit: Pixabay

Emerging market stocks rose on Friday for the first time this week, as Chinese equities recovered after a bruising week, although worries about a likely default by indebted property developer Evergrande kept a lid on gains.

MSCI's index of EM shares hit a three-week low earlier in the session before recouping. It was last up 0.4% as heavyweight Chinese blue-chips and Hong Kong tech stocks rose 1% and 3.2%, respectively. For the week, the EM index is set to lose around 2%, its worst weekly show in a month, as fears of contagion from a likely Evergrande default, worries over global growth, and Beijing's tightening grip on businesses hammered risk sentiment.

The editor of a Chinese state-backed newspaper warned Evergrande, saddled with more than $300 billion in total liabilities, that it should not depend on a government bailout. Its shares were set for their worst week ever, down almost 30%. "We suspect it would take a policy misstep for (an Evergrande default) to cause a sharp slowdown in (China's) economy," said Simon MacAdam, senior global economist at Capital Economics.

"In a hard-landing scenario, several emerging markets are vulnerable." Indian shares marked their eighth straight session of record highs, thanks to fiscal measures.

Russia's MOEX was now more than 1% away from all-time highs, with losses on the day being led by some miners after sources said Russia's finance ministry proposed setting a mineral extraction tax. Russia's rouble was 0.3% higher against the dollar in the interbank rate, while it traded flat on the Moscow exchange, as citizens go the polls to elect a new parliament. The ruling United Russia party is expected to win despite a rating slump.

Russian central bank chief Elvira Nabiullina warned on Friday that inflation in the country could hit 7% this month and move back towards the target of 4% only in the second half of 2022. The bank is considering more interest-rate hikes in the upcoming meetings, Nabiullina said. Last month saw the fifth rate hike this year to 6.75%. Turkey's lira hit a five-week low, down 0.6%, extending the previous session's 1% slide. President Tayyip Erdogan said Turkey will bring inflation down as soon as possible. Annual inflation currently stands at 19.25%, above the main interest rate at 19%.

The central bank meets next week, with investors worried about a premature easing in the policy rate as Governor Sahip Kavcioglu recently struck a dovish tone amid pressure from Erdogan to cut rates.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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