Shares break four-day winning streak as Tencent, Alibaba slip

  • Alibaba, Tencent fined for failing to report deals
  • 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 markets shares broke a four-day winning streak on Wednesday as regulatory fines hit heavyweights Tencent and Alibaba, pulling tech 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 pct. Hong Kong Main Index (.HIS) closed 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 failing to properly report a dozen deals – the latest act in Beijing’s repression of several industries that began last year. Read more

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Chinese stocks hit by Beijing cramps

With the e-commerce company Meituan (3690.HK) also falling 11.2%, MSCI’s China-heavy index of new 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 a weak Asian sentiment.

In Kazakhstan, violent protests over fuel price increases led his government to resign – which served as a warning to other policy makers in the emerging markets, who tried to put the circle between tackling high inflation and the resulting burdens on the population. Read more .

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

Turkey is now prioritizing a “sincere” fight against high inflation, Finance Minister Nureddin Nebati said on Wednesday. Inflation rose to 36% in December following a series of interest rate cuts requested by President Tayyip Erdogan. Read more

Turkey’s lira last rose 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% in the next few months and may rise further towards 48% or so in Q2,” said Credit Suisse analyst Berna Bayazitoglu.

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

Most other emerging market currencies made guarded movements against the dollar as investors priced a tightening of US policy, which was the first of three rate hikes signaled for May.

This sent US government bonds and the dollar higher last night. Wednesday, the dollar index (.DXY) clung.

China’s yuan and South Africa’s rand were flat, while Russia’s ruble hit its lowest level in more than five weeks.

Battle-led China Evergrande Group (3333.HK) lost a further 0.6% after seeking the postponement of onshore bond payment due on Saturday, which would be its first domestic bond payment miss. A bondholders’ meeting is planned for 7-10. January.

Bad loan company China Huarong (2799.HK) fell by 50% to a record low level after resumption of trading after a nine-month break. Read more

For a GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh

For a GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

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Reporting by Susan Mathew in Bengaluru; Edited by Tomasz Janowski

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