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EMERGING MARKETS-Stocks set for strong week, currencies wobble ahead of U.S. jobs data

Reuters · 01/06/2023 06:27
EMERGING MARKETS-Stocks set for strong week, currencies wobble ahead of U.S. jobs data

Yuan touches fresh four-month high

Dollar steady ahead of jobs data

Evergrande to hold talks with bondholders

By Sruthi Shankar

- Emerging stock markets were set for a strong weekly performance on Friday as a loosening of China's tight COVID-19 restrictions and support for the battered property sector countered worries about U.S. interest rates remaining high.

China's yuan CNH=D3 jumped to a fresh four-month high in offshore trading, while the main stock index .SSEC, .CSI300 closed a solid week higher on expectations that the economy would soon emerge from its COVID woes and stage a robust recovery in 2023.

"The key factor in China is just that they are opening up, but they effectively have three years of pent-up demand, about $2 trillion of potential spending to catch up on," said Dominic Bokor-Ingram, senior portfolio manager for emerging and frontier markets at Fiera Capital.

"The spending power of China and the West is going in opposite directions right ."

In a bid to further support the property sector, China's central bank said the floor on mortgage rates can be lowered or abolished for first-time home buyers in phases in certain cities.

Embattled property developer China Evergrande Group 3333.HK will hold a meeting with dollar bondholders on Wednesday to discuss its debt restructuring proposals, two sources familiar with the matter told Reuters.

The MSCI's EM equities index .MSCIEF edged up 0.1%, with gains in China and South Korea .KS11 offsetting losses in India .BSESN and Philippines .PSI. However, the benchmark was set for a 3% weekly rise.

EM currencies broadly came under pressure as the dollar jumped ahead of the U.S. payrolls data expected to show a solid pace of job and wage growth in December that could keep the Federal Reserve on its aggressive rate hike path.

After a strong start to the year, central and eastern European currencies EURHUF=, EURPLN= slipped amid more subdued global sentiment.

Turkey's lira TRYTOM=D3, which shed close to 30% in 2022, was slipping towards its record low of 18.84 per dollar. It was last trading at 18.76.

Turkey's top court has ruled in favour of freezing pro-Kurdish Peoples' Democratic Party (HDP) bank accounts holding Treasury aid while it hears a case on shutting down the party over alleged ties to militants, state media said.

The move against the HDP, the third-biggest party in parliament, comes ahead of parliamentary and presidential elections that are set to be held by June.

For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

(Reporting by Sruthi Shankar in Bengaluru; Editing by Hugh Lawson)

((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2787;))