A rally in Hong Kong stocks on Thursday lifted a broader index of emerging market stocks from a week-long low, while losses for most other stock markets amid recession concerns plateaued. the earnings.
The MSCI Emerging Markets Equity Index rose 1.0% after two days of decline. Hong Kong’s tech, internet and property stocks rallied, sending the main index up 3.4% as investors cheered some easing of COVID restrictions in China. But, as recession fears lingered, heightened by worries about the US Federal Reserve’s hawkish monetary policy, risk sentiment took a hit, leaving only a handful of emerging market stock indices with small earnings.
The broader emerging markets index is down about 0.6% so far this week, taking losses this year to 21.4%, on track for its worst year since 2008. But Thornburg Investment Management was optimistic about the prospects.
“Emerging market equity valuations have been squeezed by high local interest rates and political concerns,” said Josh Rubin, portfolio manager at Thornburg. “The pattern is reversing, which may also be a tailwind for emerging market equity valuations… Emerging market economies are well positioned to reaccelerate in 2023 and beyond.”
Most currencies made measured moves against the dollar. Against a stronger euro, the Hungarian forint fell 1.0% after data showed a gaping trade deficit that widened year-on-year and widened more than expected. Separate data showed inflation in Hungary rose to an annual rate of 22.5% in November from 21.1% in October, beating forecasts and limiting the central bank’s room to cut rates.
“We expect inflation to peak and subside in emerging markets sooner than in developed markets. And that has always been an attractive setup for emerging markets,” Rubin said. The Polish zloty rose 0.2% against the euro on Thursday, outperforming other regional peers.
Overnight, a series of central bank moves saw Poland and Brazil keep their respective rates unchanged, while Peru rose 25 basis points. On Wednesday, Peruvian soil marked its worst session in eight months after the impeachment of President Pedro Castillo and the swearing in of Vice President Dina Boluarte.
The South African rand was flat against the greenback, climbing session lows as central bank data showed South Africa’s current account deficit narrowed to 0.3% gross domestic product in the third quarter of 2022, compared to a deficit of 1.6% in the second quarter. In Ghana, lawmakers are due to debate a no-confidence motion against Finance Minister Ken Ofori-Atta on Thursday. An International Monetary Fund mission is continuing in the country until December 13 to discuss financial assistance. For 2022 Emerging Markets FX performance chart see http://tmsnrt.rs/2egbfVh For 2022 MSCI Emerging Market Index performance chart see https://tmsnrt.rs/2egbfVh
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