* Stocks up 1.2%, FX edge 0.1% higher
* Turkish June manufacturing confidence down to 106.4 points
vs
109.4 in May
* EM debt sees $2.8 bln outflows in the week to Wednesday –
BofA
June 24 (Reuters) – Stocks in emerging markets advanced more
than 1% on Friday, as a drop in commodity prices eased investor
fears over stubborn inflation, while a softer U.S. dollar lifted
most regional currencies at the end of a turbulent week.
MSCI’s gauge of EM stocks jumped 1.2%, as weaker
metals and crude prices lifted risk sentiment since energy and
food have been the key drivers of inflation.
Still, the index was on track for its worst quarter since
early 2020 during a COVID-driven rout.
EM currencies including the South African
rand, the Chinese yuan and Mexico’s peso
rose between 0.1% and 0.3% as the U.S. dollar weakened
against most peers.
Both indexes have been rattled in recent weeks on worries
about the outlook for EM assets and fears that aggressive
rate-hiking cycles will hurt economic growth.
“The macro backdrop (around a global recession) creates
additional policy challenges for emerging markets, where
tightening is already well-underway, but inflation pressures are
not yet abating,” said VanEck EM Fixed Income economist Natalia
Gurushina.
“But one EM region that can afford to proceed gradually with
policy normalization is EM Asia – regional headline inflation is
much closer to the official targets than either in EMEA and
LATAM.”
Most stocks and currencies in Asia firmed, though the
Indonesian rupiah and the Philippine peso slipped
0.1% and 0.6%, respectively, a day after Bank Indonesia held
rates steady at a record low and Philippine’s central bank
announced a modest rate hike.
The Turkish lira was flat a day after the country’s
central bank stood pat on its policy rate for the sixth straight
month. Business confidence among Turkish manufacturers fell to
106.4 points in June, compared with 109.4 points last month,
central bank data showed.
“Turkey’s key rate and inflation gap are the highest among
major economies by a wide margin – the USDTRY is hitting a glass
ceiling of around 17.36, exactly twice as high as a year ago and
close to the shock highs of December,” said Alex Kuptsikevich,
senior market analyst at FxPro.
“The national currency shall act as a compensating
mechanism, but it cannot do so to its full extent because of the
strict capital controls, which only further restrain economic
growth, preventing it from restarting the economic engine.”
Weekly data from the Bank of America showed that EM debt
funds lost $2.8 billion in an 11th straight week of outflows in
the week ended Wednesday, while regional equity funds saw $300
million depart.
For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
(Reporting by Anisha Sircar in Bengaluru; Editing by Sherry
Jacob-Phillips)
