Stocks sag as China worries, Hong Kong downgrade looms

Dec 7 – Shares in most emerging markets dropped on Thursday led by Chinese stocks, after trade data failed to instil confidence about recovery in the world’s second-largest economy, while a Moody’s downgrade on Hong Kong further added to the gloom.

Heavy-weight China blue-chips closed 0.2% lower after data showed exports grew for the first time in six months in November, while imports unexpectedly fell following the previous month’s increase.

“Today’s trade data add to signs of stabilization of China’s economy. However, both external and domestic demand has nevertheless remained soft, in line with the mixed signals given by the latest PMI readings,” said Tommy Wu, senior economist at Commerzbank Research.

Hong Kong listed equities tumbled 0.7% to a 13-month low after Moody’s put Hong Kong, Macau and swathes of China’s state-owned firms and banks on downgrade warnings, after an identical move on Wednesday on the mainland government’s ratings.

MSCI’s index tracking developing markets equities lost 0.5%, while a basket of currencies dipped 0.1% against the dollar as of 0913 GMT.

The indices have been range-bound following November’s rally, as investors await U.S. November non-farm payrolls data that could determine the outlook for the world’s largest economy and U.S. monetary policy.

India’s benchmark NSE Nifty 50 stock index dipped 0.1% after rising for seven consecutive sessions and hitting record highs.

In central and eastern Europe, Poland’s zloty fell 0.2% against the euro, a day after the local central bank left its main interest rate on hold at 5.75%.

Czech’s crown rose 0.2% as data showed industrial output rose by a higher-than-expected 1.9% in October, after a revised 4.9% fall in September.

Turkey’s BIST 100 stock index shed 0.3%, with the banking index tanking 3.1%. The Turkish Banking Association (TBB) and Central Bank Governor Hafize Gaye Erkan evaluated the transition to lira and moves to reduce the amount of forex-protected KKM deposits converted from foreign currency.

Russia’s rouble strengthened to 92.54 to the dollar. The local parliament voted to set March 17, 2024 as the date for presidential elections, with residents of the parts of Ukraine annexed by Russia to participate for the first time.

In Latin America, Presidents of the four Mercosur nations meet for their annual summit in Rio de Janeiro with black clouds hovering over the fate of a trade deal with the European Union, as well as the future of the regional common market itself.

(Reporting by Johann M Cherian in Bengaluru; Editing by Rashmi Aich)