EMERGING MARKETS-FX at 2-month low, stocks slammed by Chinese tech crackdown
* Tencent, Alibaba and Baidu down 3.7% to 4.6%
* The largest Chinese component of the MSCI EM stock index
* Polish c.bank meeting scheduled for later today
* Russian ruble leads EMEA exchange rate losses, volatility peaks
* Turkish Lira counteracts trend (adds details on volatility gauges, Didi Global)
July 8 (Reuters) – Emerging market currencies fell to their lowest level in two months on Thursday amid growing concerns over the slowing post-COVID economic recovery, while stocks fell 1.6% in because of the nervousness of the Chinese crackdown on tech companies.
The MSCI Emerging Market Currency Index fell 0.3% to a two-month low after minutes from the recent Federal Reserve meeting confirmed the bank’s schedule to start tightening policy .
The Russian ruble was the worst performing currency in Europe, the Middle East and Africa, sinking almost 1% to 75.2372 – its lowest level against the dollar in two months.
A one-month gauge of the ruble’s implied volatility hit its highest level in two months.
The Turkish lira reversed the trend, trading widely against the dollar after Reuters said the country was considering a further injection of capital for state banks to support economic growth.
A one-month gauge of the pound’s implied volatility hovered just above a one-year low.
In China, fears of a slowing post-COVID economic recovery intensified after the country’s cabinet said authorities would use timely cuts in banks’ reserve requirement ratios (RRRs) to support the economy.
The yuan fell 0.1% against the dollar, while the yield on 10-year Chinese sovereign bonds registered its largest decline in nearly a year.
“The signal for a possible easing of the RRR shows that policymakers are concerned about ensuring that sufficient liquidity reaches the economy,” said Sacha Tihanyi, chief emerging markets strategy at TD Securities.
Growing cases of the Delta variant of the coronavirus across the world have also soured sentiment of a recovery, hurting emerging markets in recent weeks.
The MSCI Emerging Markets Equity Index fell 1.6% to a more than seven week low. Chinese and Hong Kong heavy stocks were sold en masse after the government ordered the removal of the Didi Global ridesharing app from mobile app stores and fined large tech companies.
Didi shares have fallen nearly 7% in pre-market trading in the United States, with the company losing around $ 16 billion in market capitalization this week.
Tencent and Alibaba Group, the second and third largest emerging market stocks, and Chinese major Baidu Inc, fell between 3.7% and 4.6%.
South African equities led the declines in EMEA with a decline of 2.1%. Shares of tech company Naspers Ltd, which owns a large stake in Tencent, fell 2.8%.
In central Europe, the Polish zloty lost 0.3% against the euro ahead of a central bank meeting later today. The bank is generally expected to maintain interest rates slightly above zero.
The losses of the Hungarian forint were moderated after higher than expected inflation strengthened the case for tighter monetary policy.
For TOP NEWS in emerging markets
For the CENTRAL EUROPE market report, see
For the TURKISH market report, see
For the report on the RUSSIAN market, see
Reporting by Ambar Warrick Editing by Raissa Kasolowsky and Chizu Nomiyama