EMERGING MARKETS-Lira hits record low ahead of cenbank decision; EM stocks trip

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* Turkish Senbank decision 11 GMT, SARB 1300 GMT . Feather

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* EM stocks fell as Chinese assets and technical names declined

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* Evergrande sells stake in HengTen for a loss of HK$8.5 bln

Nov 18 (Businesshala) – Asset and technology stocks edged lower 0.7% on emerging market shares on Thursday, while Turkey’s lira rallied with ever-hit 11 levels for the dollar and South Africa’s rand rallied 10 percent from the central bank. remained at the lowest level in the month. Decision.

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The lira slid to a record low of 10.98 per dollar after Turkish President Tayyip Erdogan reiterated his opposition to higher interest rates ahead of a central bank meeting, with a cut of 100 basis points to 15% despite 20% annual inflation. are supposed to.

Further depreciation in currency is seen to be feeding back into inflation. The Central Bank of Turkey (CBT) decision is due at 1100 GMT.

“If CBT skips the rate cut, the lira will again come under pressure due to Erdogan’s possible reaction,” said Commerzbank’s FX and EM analyst and Ghosh.

“If CBT cuts the rate, it will not matter whether it is 50bp, 100bp or 200bp. There will be no driver to counter the Lira’s ongoing move, which is likely to accelerate. ,

Meanwhile, the South African Reserve Bank (SARB) is expected to keep rates at 3.5% in a decision seen very close to the call. The Rand erased an early lead and slipped 0.1%.

“The significant increase in headline inflation since spring supports the rate hike at today’s meeting,” Commerzbank said. But “if the SARB leaves its key rate unchanged, as we expect, it could lead to disappointment … and a loss for the rand.”

Earlier in the day, Indonesian and Philippine central banks kept their rates unchanged as expected. While most Asian central banks have kept rates to spur growth, elsewhere, with a few exceptions, such as South Africa, have accelerated aggressively to contain inflation.

Signs from Chinese officials that some currency appreciation may be tolerated sent the yuan’s trade-weighted basket index to 101.88, its highest since December 9, 2015.

Russia’s ruble rose 0.2% as it seeks to recover heavy losses it incurred last week on deepening tensions with the West.

Emerging market stocks looked set for their worst session in three weeks.

As developer China Evergrande Group struggles to avoid defaulting on $300 billion in debt, it sold its entire 18% stake in streaming services firm Hengten Network Group for HK$2.13 billion ($273.5 million), raising HK$ 8.5 billion in damages.

Tencent, which owns 20% in HengTen, fell and underperformed tech and Internet shares. Other Chinese media stocks fell after state media flagged risks related to the Metaverse.

Elsewhere, South Africa’s stock index retreated from an all-time high, while Polish shares fell 1.4%.

For a graphic on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh Look for a graphic on MSCI’s emerging index performance in 2021 tmsnrt.rs/2OusNdX

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Reporting by Susan Mathew in Bengaluru; Editing by Subhranshu Sahu


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