Stocks regain ground on China recovery hopes, FX subdued -September 27, 2023 at 05:15 am EDT

* EM stocks snap two-day losing streak

* Pace of declines in China’s industrial profits eases

* China Evergrande chairman under police watch- report

* Thai c.bank unexpectedly raises key interest rate

* Czech interest rate decision due

Sept 27 (Reuters) – Emerging market stocks on Wednesday
got a lift from signs of economic recovery in China and hopes of
further policy support, though regional currencies stayed under
pressure on jitters around higher-for-longer U.S. interest
rates.

China’s blue-chip CSI 300 and Hong Kong’s
benchmark index gained 0.2% and 0.8%, respectively, as
data showed a slight easing in the pace of declines in
industrial profits, adding to evidence that policy support steps
undertaken by authorities were beginning to take effect.

Aiding sentiment further, China’s central bank said it would
step up policy adjustments to boost economic recovery.

However, concerns about China’s property sector continued to
balloon, with the chairman of Evergrande Group under
police surveillance, according to a Bloomberg News report.
Shares of the embattled developer were down 19% on Wednesday,
taking this week’s losses so far to nearly 42%.

MSCI’s index of emerging market equities (EM) was
up 0.1% by 0856 GMT.

The index had fallen for the past two straight sessions as
U.S. Treasury yields soared to multi-year highs after the
Federal Reserve’s hawkish signals fuelled expectations about
further tightening by the central bank.

The EM currencies index was in the red for
the third day in a row, down 0.1% with the dollar muted
after having hit a ten-month peak of 106.32 earlier in the
session.

“The FX market has become too convinced of a ‘soft landing’
for the U.S. economy,” said Ulrich Leuchtmann, head of FX and
commodity research at Commerzbank, adding that the USD rally
could see a strong correction if it doesn’t materialize.

Thailand’s baht pared early losses and was last
down 0.4% against the dollar after the country’s central bank
unexpectedly raised its key interest rate for an eighth straight
meeting.

Among central and eastern European currencies, the Hungarian
forint firmed 0.6% versus the euro, a day after the
central bank cut its one-day deposit rate to 13%.

The Czech crown was flat ahead of a local monetary
policy decision, where the central bank is expected to keep
interest rates on hold for a tenth straight meeting, according
to a Reuters poll.

Crude prices continued their climb on Wednesday, pressuring
currencies of importers such as India and Turkey.

Turkey’s lira hit a fresh record low of 28 to
the dollar.
For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

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For RUSSIAN market report, see
(Reporting by Amruta Khandekar; Editing by Devika Syamnath)