Developing Markets Brace for China Policy Announcements and Interest-Rate Decisions

Market caution spread across developing nations as investors awaited China policy announcements and decisions from central banks. Emerging markets equities saw a dip, while various Asian tech stocks also slid. South Africa's rand and market responses awaited Parliament's direction, and global currencies experienced mixed movements amidst geopolitical tensions.

Caution dominated developing markets on Wednesday, with investors keenly awaiting China's policy announcements and key interest-rate decisions from several central banks. The MSCI index tracking emerging market equities dropped 0.4%, marking its third consecutive day of losses, while a currency gauge remained flat.

Chinese stocks rose by 0.5% as markets hoped for supportive policies following the Communist Party meeting. However, Asia's tech-heavy indexes, including those in Taiwan, Korea, and Hong Kong, fell between 0.6% and 1.5%. The decline was driven by reports that the U.S. may impose stricter export controls on advanced chip technology to China, overshadowing an optimistic quarterly revenue forecast from TSMC.

In South Africa, the rand remained steady, and the yield on the benchmark sovereign bond increased by 2 basis points ahead of an anticipated rate decision. Economists largely believe the central bank will maintain rates at 8.25%. Markets are also closely monitoring President Cyril Ramaphosa's parliamentary address for insights on policy directions amid the newly formed coalition government.

Elsewhere, a Ukrainian parliamentary budget committee endorsed legislation allowing the government to halt debt payments amid the ongoing conflict with Russia. Bangladesh's taka was flat amid local protests, Kenya's shilling saw little change following a police ban on demonstrations, and Israel's Tel Aviv index dipped slightly.

Currencies in central and eastern Europe showed varied movements; Hungary's forint gained 0.3%, while Egypt's pound slipped 0.1% ahead of its interest rate decision.

(With inputs from agencies.)