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EM stocks, currencies at over seven-week lows
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China stocks fall amid rising tensions with U.S.
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Turkey's foreign trade deficit widens in January
By Shubham Batra and Amruta Khandekar Feb 27 (Reuters) - Geopolitical tensions and concerns that a resilient U.S. economy would lead the Federal Reserve to keep interest rates higher for longer pulled down emerging market stocks and currencies on Monday to their lowest levels in over a month. MSCI's EM equities index lost 0.8%, and was at levels touched in early January. China equities and Hong Kong stocks slid 0.4% and 0.3%, respectively, after the U.S. warned China of serious consequences if it provided arms to support Russia's invasion of Ukraine, while investors awaited policy signals from the upcoming National People's Congress in China. "The battlefield in Ukraine (is among) many of the risks for emerging markets investors. I don't believe that U.S. will launch a major new trade war on China just because of general trade with Russia," said Christopher Granville, managing director of Global Political Research at TS Lombard. "(It) will target Chinese companies and the Chinese government, if it gets evidence of specific military supplies to Russia. But until now, China has been very cautious on this." EM assets had a stellar start in January, but sentiment soured in February as signs of resilience in the U.S. economy spurred worries that the Fed may continue with an aggressive monetary policy. Stocks saw their worst weekly performance last week since October 2022. Regional currencies slipped 0.4% against a stronger dollar on Monday and were also at their lowest in over seven weeks. Turkey's lira was subdued at 18.885 against the dollar. Turkey's foreign trade deficit widened in January, while economic confidence fell 0.3% month-on-month in February to 99.1 points, after massive earthquakes that devastated the country's southern region. The South African rand was flat after recording declines last week, when a global financial crime watchdog added South Africa to its list of countries under special scrutiny. Offshore investors sold a net 3.13 billion rand ($169.5 million) of South African stocks last week, data from the Johannesburg Stock Exchange showed on Monday. In central and eastern Europe, Hungarian forint was down 0.3% against the euro, while the Polish zloty was flat. Elsewhere in emerging markets, Adani Group is in talks with global credit funds to raise up to $400 million in debt against some of its assets in Australia, the Economic Times reported on Monday, as the group's shares continued to bleed in the aftermath of a short-seller report. (Reporting by Shubham Batra and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta)
