July 25 (Reuters) – A rally in Chinese equities on vows of economic support lifted the emerging market stocks index to a one-month high on Tuesday, while the furore in Israel over the government pushing through judicial changes spurred selling in the country’s markets.
China’s blue chips index .CSI, broader benchmark index .SSEC and Hong Kong’s Hang Seng .HSI soared between 2.1% and 4.1% after top leaders pledged to step up policy support to boost domestic demand amid a rocky post-COVID recovery.
The MSCI gauge for EM stocks .MSCIEF gained 1.8%, and was set for its biggest one-day percentage gain in nearly two months.
China’s property developers’ shares and bonds also enjoyed strong buying, with the sector’s giant Country Garden 2007.HK and its management unit Country Garden Services 6098.HK rebounding 18.3% and 26.5%, respectively.
Meanwhile, analysts’ opinions on the significance of the July Politburo meeting were divided, with most, however, acknowledging a notable change in tone to support the beaten-down real estate market.
“More stimulus is on the way, but it will probably be just enough for the economy to meet the ‘around 5%’ official target,” said Tommy Wu, senior China economist at Commerzbank.
The MSCI index for EM currencies .MIEM00000CUS gained 0.3%, with the yuan CNY= rising 0.6%, also aided by major Chinese state-owned banks selling U.S. dollars in both onshore and offshore spot markets, Reuters reported.
Meanwhile, the shekel ILS= touched a two-week low against the greenback, while Tel Aviv share index .TA125 was on track to log its steepest two-day decline since mid March.
Israel’s parliament on Monday ratified the first bill of a judicial overhaul sought by Prime Minister Benjamin Netanyahu, after last-gasp compromise efforts collapsed and failed to ease a constitutional crisis that has been convulsing the country for months.
“We are in for a prolonged period of political and economic uncertainty… the protests are not going to end just because the vote was won in parliament,” said Stuart Cole, chief macro economist at Equiti Capital.
“Investors will be looking to offload Israeli assets and move capital out of the country given that there is no obvious end in sight to the domestic turmoil.”
Ghana’s central bank on Monday called for tighter fiscal policy as it hiked its main interest rate by another 50 basis points to 30.0%. The nation is grappling with its worst economic crisis in a generation amid double-digit inflation and ballooning public debt.
The cedi GHS= was up 0.4% against the dollar.
Hungary and Nigeria’s rate decisions are also on deck, with the forint EURHUF= slipping 0.1% against the euro and the Naira NGN= gaining 1.5% against the dollar.
Elsewhere, Indonesia central bank held its key policy rates for the sixth straight review.
The Russian rouble RUBUTSTN=MCX strengthened to a more than one-week high against the dollar, boosted by high oil prices and an upcoming month-end tax period.
(Reporting by Ankika Biswas in Bengaluru; Editing by Simon Cameron-Moore)
