EMERGING MARKETS – Equities, currencies shaken by weak Chinese data, inflation nervousness

* Turkish lira hits seventh consecutive record

* Chinese equities lower the MSCI EM index

* Inflation of Czech producers over 28 years old

By Ambar Warrick

Oct. 18 (Reuters) – Emerging market stocks and currencies fell on Monday as data showing slower-than-expected Chinese economic growth rocked sentiment, while investors also worried about rising inflation driving up interest rates in the developed world.

The MSCI Emerging Market Currency (EM) Index fell 0.1% as yields on the US Treasury and the dollar rose, making risk-oriented assets less attractive.

Recent gains in oil prices in hopes of a recovery in demand have fueled inflation fears.

In Europe, the Middle East and Africa (EMEA), the South African rand and the Russian ruble lost 0.6% and 0.5%, respectively, while the Turkish lira hit a record high for a seventh consecutive session, at 9.2932 per dollar.

The MSCI Emerging Markets Stock Index fell 0.3%, with Hong Kong and China stocks weighing the most after data showed the mainland economy hit its slowest growth rate in one year in the third trimester.

China is a major business destination for emerging markets, which is why an energy crisis in the country, coupled with an emerging debt crisis in its real estate sector, has taken a toll on morale in recent weeks.

Most stock indexes in the EMEA region also fell, with Russian stocks 0.8% below recent highs.

“There are two main downside risks to China’s economic growth … One is a more pronounced deceleration in real estate investment and the other is disruption due to the power shortage,” wrote the Credit Suisse analysts in a note.

“The effects of both are almost surely reflected in the third quarter numbers,” they said, adding that the impact of the two shocks on annual GDP would be “modest”.

Chinese real estate stocks fell 2.6% as market expectations of a lower reserve requirement ratio faded and fears of a new property tax increased.

But real estate bonds seemed to be doing better after a major rout last week.

In Turkey, the pound has not seen a respite after falling for more than a week after data showed rising inflation and President Tayyip Erdogan sacked three central bank policymakers over differences of opinion.

Investors are now worried about a possible interest rate cut this week, despite surging inflation.

In central Europe, the Czech koruna fell 0.2% against the euro after data showed Czech industrial producer prices jumped to their highest pace since 1993 in September.

The Czech central bank, along with most of its regional peers, is expected to continue raising interest rates in the near future, to counter spike in inflation.

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

(Reporting by Ambar Warrick; Editing by Subhranshu Sahu)

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