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China keeps lending benchmarks unchanged
South Africa, Turkey rate decision eyed
Sri Lanka June CPI due
Pakistan former PM Khan faces criminal charges
July 20 (Reuters) - Chinese stocks dragged the index for emerging market stocks on Thursday as the government’s pledge to support private economy failed to garner enthusiasm, while upcoming policy decisions from South Africa and Turkey topped traders’ watch list.
The MSCI index for EM equities slipped 0.2%, falling for the fourth session, dented by China’s blue-chips .
The government on Wednesday offered policy measures to help private business and bolster a post-pandemic recovery amid increasing signs of weak growth in the world’s second-largest economy.
“What is still missing are concrete measures and stimulus programs. Therefore, we doubt very much that the latest guideline will prove to be a game changer,” said Esther Reichelt, FX strategist at Commerzbank AG.
Meanwhile, China’s yuan rose 0.6% against the dollar as the country left its lending benchmarks unchanged, after the central bank stood pat on a key policy rate this week despite calls for more stimulus.
Ahead of their respective central bank policy decisions, South Africa’s rand gained 0.6%, while Turkey’s lira slipped. The MSCI index for EM currencies edged 0.1% higher.
“Combined with the recent ZAR rebound and sluggish economic growth due to the electricity outages, the lower inflation in theory strengthens the case of the doves in urging a status quo at 8.25%,” Societe Generale analysts noted.
“In Turkey, suspense and anxiety are running high in the run up to the CBRT’s decision. The gradual normalisation approach advocated by Treasury and Finance chief Simsek has backfired, so we’ll have to see if the strategy is adjusted to stabilise the currency and inflation.”
Most economists polled by Reuters expect South Africa to keep its repo rate unchanged, while Turkey is seen raising the policy rate by 500 basis points to 20%.
Traders also awaited June inflation data out of Sri Lanka later in the day. The rupee was down 0.3% against the greenback, while stocks gained 0.8%.
Meanwhile, Pakistan’s sovereign bonds extended declines on the dollar as the government on Wednesday said it will open criminal proceedings against former prime minister Imran Khan on charges of exposing official secrets.
Data showed Polish corporate sector wages rose by a lower-than-expected annual 11.9% in June, while another set showed producer prices rose 0.5% in June, lower than expected and a sharp slowdown from last month.
The zloty was up 0.1% against the euro.
Meanwhile, the Thai baht appreciated amid hopes for a resolution to the political uncertainty with the second-placed Pheu Thai party expected to field one of its candidates to form a government. (Reporting by Ankika Biswas in Bengaluru; Editing by Varun H K)
