Emerging market (EM) shares yesterday hit a one-month low, taking their cue from Wall Street, which plunged after the US Federal Reserve raised rates and signaled more hikes next year, dashing investors’ hopes for a more dovish outlook.
The Fed raised key rates by 25 basis points and trimmed its median forecast from three to two hikes next year, but said that strong data could force it to raise rates to the point where they start to brake the US economy’s momentum.
The US dollar strengthened after the announcement, but later retreated 0.4 percent, lending strength to most developing world currencies.
MSCI Inc’s index for emerging market stocks fell about 1 percent as indices across Asia fell, with South Korea’s KOSPI heading into bear market territory and bourses from Johannesburg to Istanbul racking up hefty losses.
“The markets had priced in a bit too dovish Fed, but the EM reaction was more or less expected,” Danske Bank A/S head of EM research Jakob Christensen said.
China shares ended at two-month lows after the central bank announced a new targeted lending tool.
“The weakness in China will continue to weigh on EM until Q1 of 2019, with the US-China standoff getting better and lending support to China’s current vacuum,” Christensen said.
Russia’s MOEX index hovered around three-week lows, led by a decline in shares of energy companies as oil prices erased most of their gains from the previous session.
However, aluminum giant United Co Rusal soared 22 percent, after news that the US Treasury would lift sanctions on the core empire of Russian businessman Oleg Deripaska.
Currencies in the developing world were mostly steady with the exception of the Chinese yuan and the Indonesian rupiah, which fell after its central bank kept benchmark interest rates on hold, but pledged to defend the currency if needed.
In eastern Europe, the Czech crown was treading water against the euro ahead of its central bank’s meeting where policymakers were expected to keep the two-week repo rate at 1.75 percent.
The Hungarian forint was mildly stronger, unscathed by a sharp decline in the third-quarter current account surplus, and a Moody’s report that said the nation’s policy responses would be tested by more challenging external conditions in the coming years.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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