Emerging market stocks fall
Putin to speak ahead of Ukraine war’s one-year anniversary
U.S., Poland to discuss increasing NATO presence
Goldman sees scepticism in China’s economic recovery
By Shubham Batra and Amruta Khandekar
Feb 21 (Reuters) – Emerging market stocks fell on Tuesday, bogged down by geopolitical worries ahead of the Ukraine war’s one-year anniversary and doubts around China’s economic recovery, while currencies were also subdued against a stronger greenback.
The MSCI EM equities index fell 0.9% ahead of a crucial speech by Russian President Vladimir Putin before the Parliament.
Heavyweight China stocks closed up 0.3%, while Hong Kong shares fell 1.7% as recent underperformance of Chinese equities appeared to reflect scepticism about the likely strength of China’s recovery, Goldman Sachs analysts said in a note.
“A dropping of China’s COVID policy that happened a few months ago will definitely bring stronger growth. But that doesn’t mean Chinese economy is in very good shape,” said Cristian Maggio, head of portfolio strategy at TD Securities.
“It is reasonable to expect still Chinese growth to remain below where we would probably like to see it by the end of this year.”
Regional currencies were down 0.3% against a stronger dollar which hovered around its highest in six weeks, ahead of data this week that could offer direction on future interest rates in the American economy.
Russia’s rouble slipped 0.2% against the greenback ahead of Putin’s speech setting out aims for the second year of his invasion of Ukraine, a day after U.S. President Joe Biden walked the streets of Kyiv promising to stand with Ukraine as long as it takes.
China is “deeply worried” that the Ukraine conflict could spiral out of control, foreign minister Qin Gang said, and called on certain countries to stop “fuelling the fire” in an apparent dig at the United States.
After an upbeat start to the year, EM assets have come under pressure in recent weeks as investors priced in more rate hikes from the Federal Reserve after data signalled resilience in the U.S. economy and elevated inflation.
Romania’s leu was flat against the euro before the central bank released the minutes of its monetary policy meeting of Feb. 9.
Hungary’s forint slid 0.4% against the euro, leading declines among major central and eastern European currencies, while the Polish zloty was down 0.1%.
President Biden and his Polish counterpart Andrzej Duda will discuss reinforcing Poland’s security and increasing the NATO presence in the country on Tuesday, the Polish president’s foreign affairs adviser said. (Reporting by Shubham Batra and Amruta Khandekar in Bengaluru, editing by Ed Osmond )