EMERGING MARKETS-Turkish lira leads EMEA losses on China woes and energy crunch

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* TRY breached over $9

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*Energy crisis allays fears of inflation

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* Dollar rally puts pressure on EMFX

* HK Tech majors decline

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Oct 12 (Businesshala) – Appetite for risk-driven assets eased with fears of a Chinese debt crisis and a global energy crisis as emerging market stocks and currencies fell on Tuesday in the Turkish lira.

The lira fell 0.5% to a record low of 9.0371 against the dollar, and was one of the biggest declines in Europe, the Middle East and Africa (EMEA).

China no. Evergrande 2 property developer, Evergrande, missed its third round of bond payments in three weeks after increased uncertainty. This intensified fears of the inclusion of the entire region, which accounts for about a quarter of China’s economic growth.

A report has suggested more Chinese scrutiny into the ties the country’s state banks and other financial institutions have developed with large private firms, leading to huge losses in major technology stocks, which this year sparked government anger. center has been.

Losses in Chinese and Hong Kong stocks pushed MSCI’s emerging market (EM) stock index lower by more than 1%. Investors also took a substantial bite out of Chinese bonds, with those in the property sector taking the biggest hit.

A global energy supply crisis, coupled with high oil prices, dented sentiment as markets feared that the resulting upward pressure on inflation could stifle economic growth, particularly in the EM.

“Commodity prices continue to rally led by oil; Resulting in higher yields and softer equities. The US dollar also edged up despite stronger commodities, suggesting that inflation fears have been fueled … so much so that even oil-powered currencies are on the backfoot,” analysts at Mizuho wrote in a note. Is.

The Russian ruble fell 0.3%, although it was trading near a four-month high.

The dollar’s rally also weighed on most emerging market currencies on rising expectations of a policy tightening by the US Federal Reserve. MSCI’s EM currencies index fell 0.3% to 1-1/2-month lows.

Central European currencies moved little to the euro.

The Polish zloty rose slightly as a member of the central bank’s monetary policy committee flagged a possible interest rate hike in November, after the bank posted a surprise increase last week.

EM currencies have reversed all of this year’s gains over the past month, deepening concerns of a slowdown in economic growth for the rest of the year.

Investors are now watching for more bullish signals from EM central banks as they struggle to contain the recent spike in inflation.

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

For top news in emerging markets

View Central Europe Market Report for

Turkey Market Report View For

For the Russian market report, see (Editing by Timothy Heritage)


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