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EMERGING MARKETS-Growth, virus concerns weigh on equities; Chinese equities rally

By on August 9, 2021 0

* JPM, Morgan Stanley and Goldman cut Chinese GDP growth forecast

* Chinese stocks rally on hopes of loose monetary policy

* Turkish flat lira, cenbank decision on Thursday

Aug. 9 (Reuters) – Chinese stocks rallied on Monday in hopes of monetary policy easing, but failed to bolster the emerging market share index, which has come under pressure from concerns about slowing global growth and increasing coronavirus cases.

The MSCI Emerging Markets Equity Index fell about 0.1% as losses in tech stocks hit Taiwan and South Korea. Equities in Turkey, Russia, Poland, meanwhile, gained between 0.1% and 0.5%.

A larger-than-expected jump in exit inflation from factories in China, slowing exports, tighter trade regulations and concerns over the growing number of coronavirus cases have prompted JPMorgan, Morgan Stanley and Goldman Sachs to cut back their growth forecasts for the world’s second-largest economy.

JPMorgan lowered its third-quarter GDP growth forecast for China to 6.7% year-on-year, from 7.4% previously. Its annual growth forecast in China for 2021 was now 8.9% compared to 9.1% previously, he said in a note.

Bets on easing policy to boost growth rose after the data was released, pushing blue-chip Chinese stocks up 1.3%.

“The economic outlook for China – and indeed other major emerging markets – has deteriorated in a way that few thought likely,” said Neil Shearing, chief economist at Capital Economics.

“Emerging markets growth has averaged 4% per year (over the past five years except 2020) and emerging market equity returns have been half that of their developed market counterparts. … build – and so far there are few signs that policymakers are changing course.

Among currencies, the MSCI Emerging Currencies Index fell 0.1%. While many emerging market central banks have already taken a hawkish stance to ward off inflation, markets were rocked a bit last week when senior U.S. Federal Reserve officials hinted that the cutback in stimulus measures American could arrive sooner than expected.

The loose monetary policy of the big central banks helped riskier emerging market assets to rebound during the pandemic.

The Turkish lira was stable against the dollar after hitting a month low earlier in the session. All eyes are on the central bank meeting on Thursday.

The bank is expected to keep rates unchanged at 19% even as inflation rises so much, with the complicated decision by President Tayyip Erdogan who said last week that the benchmark interest rate would be lowered.

The Russian ruble edged up against the greenback, while the Czech crown and Polish zloty strengthened around 0.1% against the euro.

South African markets have been closed for a local holiday.

For the CHART on the performance of emerging markets forex in 2021, see tmsnrt.rs/2egbfVh For the CHART on the performance of the MSCI emerging market index in 2021, see tmsnrt.rs/2OusNdX

For TOP NEWS in emerging markets

For the CENTRAL EUROPE market report, see

For the TURKISH market report, see

For the report on the RUSSIAN market, see (Report by Susan Mathew in Bangalore; Editing by Anil D’Silva)