EMERGING MARKETS-Stocks slip on growth concerns, set to end week flat
Emerging market stocks fell on Friday on mounting worries about economic growth, while a less-hawkish rhetoric from the U.S. Federal Reserve dulled the dollar and put an index of risky currencies on course for a weekly gain. MSCI's index of emerging market shares fell 0.3%, set to end the week flat, as most major bourses in the emerging market universe fell.
Emerging market stocks fell on Friday on mounting worries about economic growth, while a less-hawkish rhetoric from the U.S. Federal Reserve dulled the dollar and put an index of risky currencies on course for a weekly gain.
MSCI's index of emerging market shares fell 0.3%, set to end the week flat, as most major bourses in the emerging market universe fell. Bucking the trend, a rally in property shares lifted mainland China indexes after sources said the central bank was set to offer cheap loans to financial firms for buying bonds issued by property developers, the strongest policy support yet for the crisis-hit sector. .
More COVID-19 curbs in China hitting economic growth, and worries about tighter monetary policy squeezing global GDP have weighed on risk sentiment this year. However, the Fed signalling it could temper its pace of interest rate hikes eased fears to an extent, leaving the safe-haven dollar on course for weekly losses, and helping an index of emerging market currencies recover most of last week's declines.
Inflows to EM equities increased in the latest week to over $1.1 billion from $734 million last week, J.P.Morgan data showed. On Friday, most emerging market currencies traded within a narrow range.
Hungary's forint rose against the euro but was still down 1.5% on the week. Hungary expects to receive a total of about 7 billon euros worth of European Union funds next year from various EU programmes, the government said on Thursday. "On EU funds, the Hungarian government's reassurances amount to little – the European Commission (EC) is blocking it... hence official confirmation of a resolution must come from that source before it can act as relief for the market," said Tatha Ghose, EM and FX analyst at Commerzbank.
The EC will likely approve Hungary's post-pandemic recovery plan next week, but could hold back any payouts until Budapest fulfils all agreed conditions, sources said. Malaysia's ringgit rose 0.4% against the dollar to hit over three-month highs as the appointment on Anwar Ibrahim as prime minister on Thursday ended days of deadlock following weekend elections.
In Ghana, sovereign dollar-denominated bonds fell as much as 1.4 cent in the dollar after Deputy Finance Minister John Kumah said the country is considering a "haircut" of up to 30% on its overseas debt. For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX For TOP NEWS across emerging markets
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