Emerging markets stocks hover at two-month low; Indonesia, Hungary in focus
MSCI•MSCI's emerging market stocks index hovered at a two-month low on Monday, while Indonesian stocks fell 3.6% to a 2020 low after MSCI said it would seek to remove the country from its investable indexes. Hungary's forint edged up ahead of its 2027 budget announcement, while Chinese data showed third-quarter growth rebounded from three-year lows.
1. Emerging markets weaken
MSCI's emerging market stocks and currencies benchmarks were flat on Monday, with the equities index near its lowest level since July 31. Turkish equities fell about 1% after the country was warned of a potential downgrade if reforms were not made, while Turkish bank shares rose about 0.3%.
2. Indonesia selloff deepens
Indonesian stocks slid 3.6% to a 2020 low after MSCI said it sought to cut the country from its suite of investable indexes. The stock market operator halved the daily limit on price declines to contain the selloff. The central bank is expected to announce its interest-rate decision on Wednesday; a Reuters poll found economists expected no change. The rupiah dipped 0.1% and was down more than 7% for the year.
3. Budgets and rate decisions
Investors were focused on Hungarian Prime Minister Peter Magyar's 2027 budget, a test of fiscal credibility as he seeks to bring the deficit below the EU's 3% ceiling. The forint rose 0.1%, while local stocks dipped 0.2% and international bonds were marginally lower. South Africa's medium-term budget statement was expected this week. In China, third-quarter growth rebounded from three-year lows as exports offset weak consumer spending, and the yuan edged up 0.1% to a four-year high. Rate decisions were expected later in the week in China, Hungary and Turkey.
