Home Business Stocks extend losses on China worries; Hungary c.bank eyed

Stocks extend losses on China worries; Hungary c.bank eyed

8 min read
Comments Off on Stocks extend losses on China worries; Hungary c.bank eyed


Article content

Emerging market stocks extended loses on Tuesday on worries that China could reintroduce curbs to contain COVID-19 flare-ups, while Hungary’s forint edged higher ahead of a central bank decision where the key rate was seen unchanged.

Mainland China stocks steadied following a slide on Monday, thanks to more support from Beijing for the country’s embattled property sector.

Article content

But Hong Kong shares fell another 1.3% dragged by tech shares, extending declines to a fifth straight session.

Advertisement 2

Article content

Beijing shut parks, shopping malls and museums on Tuesday while more Chinese cities resumed mass testing for COVID-19 as cases spiked, raising worries about more curbs hitting an economic recovery in the world’s second-largest economy.

MSCI’s China-heavy index of emerging market stocks fell 0.4% to one-week lows. But capping losses were gains in India , central Europe and Turkey.

“Supply chain disruptions from lockdowns (in China) would not only hurt Chinese manufacturers but regional ones as well… The absence of positive news means investors will stay away instead of participating in bargain-hunting,” said Olivier d’Assier, head of applied research, APAC at Qontigo.

Intensifying worries about China’s lockdowns come as risk appetite has already been hammered by concerns about the hit to global growth from aggressive monetary policy tightening to control surging inflation.

Advertisement 3

Article content

“Risk aversion remains well above risk tolerance… and a better-safe-than-sorry approach to markets in the short-term.”

On Tuesday, EM currencies firmed as the dollar retreated with South Africa’s rand, China’s yuan and Malaysia’s ringgit up between 0.2% and 0.4%.

In South Africa, attention this week will be on inflation figures as well as a central bank policy decision. A Reuters poll expects a 75 basis points hike, but JPMorgan analysts say there may be “sufficient room” for the central bank to consider slowing the pace of tightening.


Hungary’s forint rose 0.1% to trade at around 408 per euro. The country’s central bank is seen keeping the base rate on hold at 13% on Tuesday.

Following last month’s emergency rate rise to shore up the forint, which had hit record lows, the bank pledged to offer its new quick deposit tool at an 18% rate “as long as necessary.”

Advertisement 4

Article content

On Monday, Hungary also capped interest rates on large commercial bank deposits.

The spectrum of market interest rates dropped modestly after Monday’s announcement, which turns out to be FX-negative, said Commerzbank’s EM and FX analyst Tatha Ghose, expecting little of interest from Tuesday’s meeting. 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

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; Editing by Alex Richardson)



Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.


Source link

Load More Related Articles
Load More By 
Load More In Business
Comments are closed.

Check Also

China’s Jan factory activity contracts at slower pace – Caixin PMI

[ad_1] Breadcrumb Trail Links PMN Business Article content BEIJING — China’s factory activ…