July 18 (Reuters) – Caution prevailed across most developing markets on Wednesday, ahead of China policy announcements and interest-rate decisions by a few central banks, while attention was also on the opening of South Africa’s parliament following recent elections.
MSCI’s index tracking emerging markets equities slipped 0.4%, its third-straight day in losses, while a currencies gauge was flat against the dollar.
China stocks settled higher by 0.5%, with markets anticipating any policy announcements to support the second largest economy’s sluggish recovery, following the conclusion of a four-day Communist Party meet.
Tech-heavy stock indexes in Asia such as Taiwan, Korea and Hong Kong’s tech index closed lower between 0.6% and 1.5%, as a report of the U.S. mulling tighter export curbs on advanced chip technology to China overshadowed an upbeat quarterly revenue forecast from TSMC.
South Africa’s rand was muted, and yield on the benchmark sovereign bond ticked up 2 basis points (bps) ahead of a rate decision, where most economists expect the local central bank to leave rates at 8.25%.
Markets will also focus on President Cyril Ramaphosa’s opening address to parliament, for any clues on the policy trajectory for the first coalition government in the country.
“The reforms designed to improve electricity infrastructure is probably going to be the biggest challenge for South Africa and if they’re able to come up with policies and improvements to infrastructure, then markets would react favourably to that,” said Matthew Ryan, head of market strategy at Ebury.
The rand has strengthened about 3.5% after national elections held in late May pointed to a coalition government, and the local central bank has stayed put on borrowing costs.
Meanwhile, a parliamentary budget committee has recommended that lawmakers approve a law granting the Ukrainian government the right to suspend debt payments.
Against the backdrop of the Russian-Ukraine conflict, the country has $19.7 billion outstanding on its international bonds and owes $2.6 billion on GDP warrants. The hryvnia inched up 0.3%, after depreciating more than 1% on Wednesday.
Meanwhile, Bangladesh’s taka was flat, even as local protests over high unemployment intensified. Kenya’s shilling was muted as investors monitored local developments after police banned demonstrations in the capital following weeks of anti-government protests.
In the Middle East, Israel’s Tel Aviv stock index slipped 0.3%. The exchange is expected to launch a futures market in September.
Hungary’s forint led gains among eastern and central European currencies with a 0.3% rise, to touch levels seen more than a month ago.
Elsewhere, Egypt’s pound slipped 0.1% ahead of an interest rate decision, with economists expecting no change.
(Reporting by Johann M Cherian in Bengaluru; Editing by Arun Koyyur)
