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Emerging Markets-Stocks, FX Listless Ahead of Inflation Data; Israel, Ghana Rate Decisions in Focus

Most emerging market stocks and currencies were muted on Monday ahead of inflation prints across major economies this week, while investors assessed signs of slowing Chinese industrial profit growth and awaited Israel and Ghana’s policy decisions.

The MSCI’s stocks gauge slipped 0.2%, dragged by China’s blue-chips and Hong Kong stocks. However, the index was poised for its first monthly gain in four.

Industrial profits in the world’s second-largest economy extended gains in October at a slower pace, suggesting the need for more policy support. The 2.7% year-on-year profit rise follows double-digit growth in September and August.

“The improvement is slower than expected because of the base effects and also faster growth in costs,” said Kelvin Lam, senior economist at Pantheon Macroeconomics.

“While China’s economic recovery remains fragile, we expect the year-to-date industrial profits should continue to improve for the rest of year. The upcoming property measures should help stabilise sentiments in the real estate market and hence demand for both new and existing housing.”

The property sector lost 2.5%, after logging its biggest weekly gain of nearly 9% last week in nearly four months.

Securities regulator approved three applications for China’s first publicly traded consumption-related REITs, but market participants see headwinds to appetite for the new products. Meanwhile, ratings agency Fitch expects Chinese property developers’ operating environment to remain challenging in 2024.

Investors also awaited more economic data from China and inflation prints out of the United States and Europe, and a meeting of oil producers due this week.

The MSCI index for EM currencies inched up 0.1%, also set for its best monthly gain since January.

Israel’s shekel was down 0.1% against the U.S. dollar ahead of the central bank decision, where it is expected to leave short-term interest rates unchanged to maintain financial stability and avert an uptick in inflation as the war with Hamas raises supply concerns.

Investors also awaited Ghana’s policy decision later in the day. The cedi was up 0.1%.

Meanwhile, Nigeria’s new central bank governor Olayemi Cardoso said on Friday monetary policy will be tightened over the next two quarters to manage inflation, while directing banks to boost capital. Separately, data showed Nigeria’s economy grew 2.54% in the third quarter, largely unchanged from the previous quarter.

On the rating front, Moody’s upgraded Czech Republic’s outlook to “stable” from “negative”. The crown was up 0.1% against the euro.

Among others, S&P Global Ratings revised Bahrain’s outlook to “stable” from “positive”, while raising Bulgaria’s outlook to “positive” from “stable”. (Reporting by Ankika Biswas in Bengaluru; Editing by Shinjini Ganguli)

Source : Yahoo Finance