Emerging markets stocks struggle

EQUITIES in emerging economies lost momentum yesterday as markets in China and Hong Kong were hit by growing property sector concerns, while the Hungarian forint was subdued in the run-up to a widely expected local rate cut.

MSCI’s index for emerging market (EM) stocks had shed 0,7 percent by 0912 GMT, coming off a two-week high hit in the prior session. Heavyweight China and Hong Kong .HSI stocks fell 1,8 percent and 2,3 percent respectively, as the liquidation of property giant China Evergrande triggered fresh concerns over China’s heavily indebted real estate sector.

“The Evergrande headlines yesterday serve as a reminder that there are no quick fixes for the property sector and the measures announced by policymakers to support local equity markets…are not proving effective,” Chris Turner, global head of markets at ING wrote in a note.

China’s 10-year government bond yields slid below 2,47 percent to their lowest levels since June 2002 as markets bet the country would ease monetary policy to support its faltering economy.

Most other Asian bourses were also in the red as an uptick in oil prices due to tensions in the Middle East raised concerns about prolonged inflationary pressures ahead of the US Federal Reserve’s interest rate announcement due today.

Commentary from the central bank following the decision will be a key catalyst for risky EM assets as it will influence bets about the timing of US rate cuts, which have been scaled back this month.

Equities in Turkey, South Africa, Poland and Romania climbed between 0,2 percent and 0,6 percent.

In currencies, the Hungarian forint was down 0,1 percent, languishing at near fourmonth lows against the euro ahead of a local monetary policy decision due at 1300 GMT. — CNBC Africa