*
EM stocks rise amid no new signs of banking stresses
*
SARB expected to wrap up tightening with 25 bps hike
*
C.banks in Mexico, Colombia seen hiking rates later in the
day
By Shreyashi Sanyal March 30 (Reuters) - Emerging market stocks rose for a third straight session on Thursday, taking comfort from the absence of any new signs of cracks in the global banking system, while South Africa's rand firmed ahead of a likely interest-rate hike later in the day.
The MSCI's index for EM stocks rose 0.4%, as a sense of calmness returned to markets following worries setoff by a banking sector rout in Europe and the United States earlier this month.
The index is now set to rise nearly 3% for the first quarter, still lower than a 9% gain in the last three months of 2022 as fears of higher interest rates and growth worries tempered optimism around developing world assets that was at play in the final months of last year.
Asian equities also extended gains, with Hong Kong stocks up 0.6%, rising for the third straight session. Internet giant Alibaba's restructuring plan helped lift the Hong Kong's tech-heavy index.
Stocks in South Africa rose 0.8%, while the rand added 0.2% to trade at about 18 against the dollar, ahead of what is expected to be the South African Reserve Bank's (SARB) last 25 basis points (bps) rate hike in its tightening cycle.
"The SARB is widely expected to raise interest rates by 25 bps to 7.50%. This comes in the wake of a disappointing overshoot in February CPI," said Piotr Matys, senior FX analyst at In Touch Capital Markets, London.
"Persistent core inflation may well be giving the MPC sleepless nights, but due to building anxiety concerning the global banking sector, a full 25 bps hike is not priced in." The Russian rouble steadied after touching its lowest since March 21 against the dollar, having now lost the support of a favourable month-end tax period, while oil prices threatening to dip again also weighed on sentiment. Later in the day, Latin American assets will be in focus with central banks from both Colombia and Mexico set to deliver 25 bps rate increases, each.
The Bank of Mexico is expected to moderate the pace of its monetary tightening, after increasing rates by 50 bps in February, as inflation has shown signs of cooling.
Colombia's central bank is seen raising rates one last time
amid forecasts that the slowing economy will cool inflation.
Brazilian assets will also be watched after government
sources told Reuters on Wednesday that President Luiz Inacio
Lula da Silva's new fiscal framework targets a zero primary
deficit in 2024, followed by surpluses in subsequent years.
For GRAPHIC on emerging market FX performance in 2023, see For GRAPHIC on MSCI emerging index performance in 2023, see For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Rashmi
Aich)
