CHINESE EQUITIES LIFT MARKETS

EMERGING market stocks rallied yesterday on gains in Chinese equities, while regional currencies edged up against a softer dollar with investors cautious ahead of a much-awaited interest rate decision by the US Federal Reserve (Fed).

The MSCI’s index for emerging market stocks rose 1.1% in early trade, snapping a three-day losing streak.

Stocks in emerging market’s largest economy, China, rose nearly 1% after a private sector survey showed factory activity shrank more slowly in January after Beijing lifted its tough Covid curbs late last year.

In India, billionaire Gautam Adani lost his title of Asia’s richest person as a rout in his conglomerate’s stocks deepened to $82 billion (about R1.428 trillion) after a short-seller report alleged improper use of offshore tax havens and flagged concerns about high debt.

Indian shares, however, briefly rallied after the government raised the minimum tax rebate limit and stepped up spending in its full-year budget, before erasing gains soon after.

“The initial move was some short covering as no change in the capital gains tax,” said Andrew Holland, chief executive of Avendus Capital Alternate Strategies.

“Now quickly back to the Fed,” he added.

Currencies in emerging markets edged 0.2% up against a muted dollar ahead of the Fed decision, with investors pricing in a 25 basis points rise later in the day and betting on an end to the rate hikes soon.

“A push-back against a pivot and rate-cut speculation could hit risk assets and lift the dollar today,” said strategists at ING in a note.

The Polish zloty inched up against the euro, after a survey showed the slump in its manufacturing sector continued in January but rates of decline in production and new orders softened.

Hungary’s forint gained 0.4% even as data showed its seasonally-adjusted Purchasing Managers’ Index dropped to 55 in January from a revised 59.3 in December.

Czech manufacturing shrank at a slower rate in January but output contracted for the eighth consecutive month, pushing the crown 0.1% down.

The Turkish lira was subdued. Factory activity in Turkey expanded in January after shrinking for 10 consecutive months, a survey showed.

The Russian rouble eased to 70.07 against the dollar amid reduced supply of foreign currency by exporters and ahead of three government debt auctions.