EMERGING MARKETS – Tencent, COVID Cuts Equity Gains; Turkish lira companies


* Turkish inflation reaches 18.95% in July, more than expected

* Tencent drops 6% after media attack

* Russian ruble up for the 7th consecutive session; oil

Aug 3 (Reuters) – Rising inflation pushed the Turkish lira to seven-week highs on Tuesday as Chinese games company Tencent fell, concerns over the COVID-19 Delta variant and more regulations strict rules in China have limited emerging market equities.

The Turkish lira rose 0.4% against the dollar after the date showed year-on-year inflation rose more than expected in July to 18.95%, just below the benchmark interest rate of the country by 19%.

“Turkey’s new headline inflation rate hike (…) will delay the start of an easing cycle until the end of this year,” said Jason Tuvey, senior emerging markets economist at Capital Economics, adding that he expects the one-week reverse repo rate to end 2021 at 17.00%.

The central bank’s response to its meeting next week and the government’s reaction to it poses a “huge event risk,” said Simon Harvey, senior currency analyst at Monex, given that the President Tayyip Erdogan had called for rate cuts by August.

Erdogan’s interference in monetary policy and his dismissal of a hawkish governor earlier this year helped make the pound one of the worst performing currencies in emerging markets this year, down around 11% , with Peruvian soil.

Most other emerging currencies strengthened against a weaker dollar on Tuesday ahead of key US employment data this week. The Russian ruble rose 0.4%, on track for its seventh consecutive session of gain against the greenback.

The International Monetary Fund on Monday approved an allocation of $ 650 billion in IMF special drawing rights, of which about $ 275 billion goes to emerging markets and developing countries.

Among stocks, the MSCI Emerging Equity Index rose 0.2%, helped by gains in most Asian stock markets as well as those in emerging Europe, the Middle East and Africa. But Hong Kong stocks and the Shanghai Composite fell 0.5% each.

Tencent, China’s largest social media and video game company, lost 6% to weigh most on Hang Seng Index after state media article called online games “spiritual opium “. Tencent has said it will reduce minors’ access to its flagship “Honor of Kings” video game.

At the same time, the Chinese regulatory agency has announced that it is launching an investigation into chip distributors in the auto industry – the latest after previous crackdowns in the tech, consumer electronics industries. real estate and education that have driven global stock markets up amid concerns over China’s tighter control of its industries.

Stocks on the mainland have also been affected by the spread of the Delta variant from the coast to cities in the interior, prompting authorities to implement strict measures to bring the outbreak under control.

For the CHART on the performance of emerging market currencies in 2021, see tmsnrt.rs/2egbfVh For the CHART on the performance of the MSCI emerging 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 Raissa Kasolowsky)

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