* Baidu, Alibaba and Tencent fell
* Ruble leads EMEA losses, Russian stocks at record high
* Romanian, Polish c.banks await
* Fantasia, Cassa Bonds Worst Affected (Adds details on Chinese property bonds, updates prices)
Oct 5 (Businesshala) – Emerging market stocks hit a six-week low on Tuesday as the US technology round ended, while dollar bonds from Chinese property developers deepened concerns over widespread defaults in the sector.
Dollar-denominated bonds of mid-sized property developers Casas Group and Fantasia Holdings fell between 10 and 11 cents, leading to a rating downgrade among their peers on concerns over a default.
Fantasia was particularly downgraded by Fitch, Moody’s and S&P as the firm passed the loan repayment deadline on Monday.
The focus was also on China’s No. 2 property developer, Evergrande, as it struggles to clear its massive $300 billion debt pile.
Stock markets were falling on Monday as US technology stocks tumbled between 1% and 1.5% in Hong Kong-listed Baidu Inc, Alibaba Group and Tencent, some of the biggest emerging market (EM) stocks.
MSCI’s EM stock benchmark fell 0.2%, while the tech-heavy South Korean index fell 1.9%.
US Treasury yields weighed on most EM currencies, with the Russian ruble falling 0.4% against the dollar in Europe, the Middle East and Africa (EMEA).
Russia’s finance ministry said it would increase its foreign currency purchases only slightly in October, easing some pressure on the ruble, which after OPEC+ was expected to draw support from a spike in oil prices to a nearly three-year high. was fighting for. Increase the supply only gradually.
But Russian shares rose 1.4% to record highs, leading to major gains in the EMEA region as the oil and gas giant benefited from higher crude prices. Gazprom rose 1.7%.
Investors fear a jump in commodity prices will lead to inflation and hamper economic activity, especially in emerging markets.
“While technology led the decline, the sell-off was only with energy and utilities showing gains. – and for obvious reasons, because the surge in energy prices was fueling fears of at least disruptive inflation, if not outright inflation. “Mizuho analysts wrote in a note.
“‘Twin deficit’ and/or high inflation EM currencies that are sensitive to high energy import costs may be subject to restraint or worse depreciation despite a weaker dollar.”
Global economies have struggled this year with rising inflation, driven by rising commodity prices and a rebound in economic activity as the lifting of COVID-related restrictions.
Several EM central banks have started a rate-hike cycle this year in response to rising prices. Investors are now waiting for a possible hike in Romania, while Poland’s central bank is also expected to raise rates this week. 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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For the Russian market report, see (Reporting by Amber Warrick, Editing by Ed Osmond, Kirsten Donovan)