Shares break four-day winning streak when Tencent, Alibaba misses out

  • Alibaba, Tencent fined for failure to report agreements
  • Turkey prioritizes inflation control- FinMin
  • Kazakh dollar bonds hit after the government resigned
  • Evergrande to apply for delay in coupon refund

January 5 (Reuters) – Emerging market stocks broke a four-day winning streak on Wednesday as regulatory fines hit heavyweights Tencent and Alibaba, pulling technology stocks, while concerns about inflation and tighter US monetary policy also weighed.

China’s technology sector (.CSIINT) fell 2.8%, pulling the broader blue-chip index (.CSI300) down 1.0%. Hong Kong’s main index (.HIS) closed down 1.6% in its worst session in more than two weeks.

Alibaba (9988.HK), Tencent (0700.HK) and Bilibili (9626.HK) fell between 2.1% and 10.6% after the country’s top market regulator fined them for not reporting a dozen deals properly – the the latest action in Beijing’s intervention against several industries that started last year. read more

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China shares hit by Beijing cut

With the e-commerce company Meituan (3690.HK) also falling 11.2%, MSCI’s China Heavy Index of Emerging Stocks (.MSCIEF) fell 0.9%, further away from three-week highs.

Shares in Russia (.IMOEX), South Africa (.JTOPI) and Poland (.WIG) all fell between 0.1% and 0.3%, due to weak Asian sentiment.

In Kazakhstan, violent protests over fuel price increases led to the government withdrawing – and served as a warning to other decision-makers in emerging markets who were trying to figure out the circle between tackling high inflation and the resulting burdens on the population. Read more .

Kazakhstan’s dollar-denominated government bonds suffered sharp falls with the 2045 issue falling around 3 cents to the dollar and many returning to levels last seen in 2020, Tradeweb data showed.

Turkey now prioritises a “sincere” fight against high inflation, Finance Minister Nureddin Nebati said on Wednesday. Inflation there rose to 36 percent in December after a series of interest rate cuts by President Tayyip Erdogan. read more

The Turkish lira was last up 0.1% to 13.4 per dollar after falling to 1.6% earlier in the session.

“We believe that (Turkey’s) overall inflation is likely to move towards 45% over the next few months and may increase further towards 48% or so in the second quarter,” said Credit Suisse analyst Berna Bayazitoglu.

But the ongoing volatility of the lira leaves a wide margin of error, Bayazitoglu said, adding that recently announced increases in electricity and natural gas prices and minimum wages increase inflationary pressures.

Most other currencies in emerging markets made guarded movements against the dollar as investors priced in policy tightening in the US, with the first of three interest rate hikes signaling for May.

This sent US government bonds and the dollar higher overnight. On Wednesday, the dollar index (.DXY) remained stable.

The Chinese yuan and the South African rand were flat, while the Russian ruble reached its lowest point in more than five weeks.

Embattled China Evergrande Group (3333.HK) lost another 0.6% after seeking deferral of payment of land bonds on Saturday, which would be the first failed domestic bond payment. A bondholders’ meeting is scheduled for 7-10. January.

Bad loan company China Huarong (2799.HK) plunged 50% to a record low level after resuming trading after a nine-month break. read more

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Reporting by Susan Mathew in Bengaluru; Edited by Tomasz Janowski

Our standards: Thomson Reuters Trust Principles.

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