Emerging equity markets came under selling pressure for a second straight day on fears that soaring global inflation would prompt central banks in advanced economies to rein in stimulus measures.
The MSCI broad EM stocks barometer fell about 0.7% on Thursday in US dollars, bringing the two-day drop to 1% – the steepest slide in about three weeks.
Shares fell on several exchanges in Asia and other emerging markets, ahead of Turkey’s latest central bank meeting and after a disappointing trading debut for its IPO. India’s public output.
Hong Kong’s Hang Seng Index fell 1.4% and mainland China’s CSI 300 fell 1%. Meanwhile, India’s Sensex share index fell 0.6 percent after Paytm One Communications owner shares reduce More than 20% after the $2.5 billion IPO was met with worries about the business prospects of fintech corporations.
Investor sentiment towards emerging markets has soured because of high inflation worldwide and a slowdown in Chinese growth due to tensions in the real estate sector. economic sense but indebtedness, as well as the coronavirus lockdown.
“We expect the world economy to grow 6% this year and 4.4% in 2022,” said Barclays analysts Ajay Rajadhyaksha and Amrut Nashikkar. ”
The strong dollar, which has surged in recent weeks as traders braced for the US Federal Reserve to raise interest rates from record lows next year, also stoked concerns about potential risks. Emerging market companies borrow in global reserve currencies.
The dollar index, which measures the US currency against six others, trades near a 16-month high after gaining more than 1.6% so far this month. Brent crude oil price, down 1% to 79.45 USD/barrel.
The Turkish lira fell to as low as 10.98 against the dollar, an all-time low, losing about 14% against the US currency in November so far.
Central Bank of Turkey, last month interest rates fall unexpectedly deep drop of 2 percentage points, will make the next monetary policy decision late on Thursday. Turkish President Recep Tayyip Erdogan, who promoted a unorthodox opinion that higher borrowing costs exacerbate inflation, asserted increasing control over the nominally independent central bank with rounds of firing of its senior officials, including two vice governors last month.
Last month, the annual rate of consumer price inflation in Turkey increased to 20%.
Remi Olu-Pitan, multi-asset fund manager at Schroders, said: “Investors mostly see Turkey as a showpiece but we can’t get complacent about it.
“It is reflecting issues such as high inflation and weak consumer demand in other emerging markets,” she added. “So it might lead to thinking about [which country] is next. ”
In Europe, the Stoxx 600 share index was unchanged in initial trading. It hit a record high on Wednesday as investors welcomed better-than-expected business results and a signal from the European Central Bank that it would maintain negative interest rates to spur lending and spending.
The German 10-year Bund yield fell 0.01 percentage points to minus 0.26% as the eurozone benchmark low-risk asset rallied. The yield on the 10-year Treasury note fell similarly to 1.56%.
