EMERGING MARKETS-EM stocks slip as risk mood wavers on policy outlook, AI fears

Stocks down 0.2%, currencies up 0.1% Hungary inflation outlook drives forint lower Bolivia will seek US financial support, minister tells WSJ By Niket Nishant Dec 18 (Reuters) - Emerging market stocks dipped on Thursday, with geopolitical tensions and domestic policy signals in focus as fears about the sustainability of the artificial intelligence-fuelled rally resurfaced. Investors await signs of further progress in the efforts to end the Russia-Ukraine war, after U.S. President Donald Trump said earlier this week that a deal was “closer than ever”. Market reaction has been uneven as unfounded optimism in the past has made traders wary. “Russian President Vladimir Putin may not be in any rush to end the war, particularly if Ukraine is getting NATO-like assurances,” said David Morrison, senior market analyst at Trade Nation. “But, should peace break out, investors expect an end to sanctions on Russian oil exports which should increase supply to an already oversupplied market.” Equities (.TASI) in Saudi Arabia, the world’s biggest oil exporter, fell 0.2%. Most of Ukraine’s dollar-denominated bonds were lower. THAI BAHT CLIMBS, CHINA REAL ESTATE UNDER PRESSURE The Thai baht (THB=TH) was 0.1% higher against the dollar. Bank of Thailand Governor Vitai Ratanakorn said policymakers have called on the finance ministry to control gold trading after a surge in such transactions helped drive up the value of the baht. The baht has become Asia’s second-best performing currency this year, which could erode export competitiveness and make Thailand a pricier destination for tourists. In China, the benchmark Shanghai Composite index (.SSEC) inched 0.2% higher while the blue-chip CSI300 index (.CSI300) dropped 0.6%. Real estate shares (.CSI000952) fell 1.8%, resuming their decline after a one-day reprieve. China Vanke (000002.SZ) began a second meeting with holders of a 2 billion yuan ($283.99 million) bond, as the crisis-hit property developer seeks to extend its debt payments to avoid a default. Its shares slipped 1.8%. HUNGARY OUTLOOK KNOCKS FORINT The Hungarian forint (EURHUF=) fell 0.4% against the euro, to its lowest since late-October. In its quarterly inflation report, the central bank said it expects tax-adjusted core inflation to slow to 3.6% next year and 3.1% in 2027 from 4.4% this year. A slowdown in inflation raises the odds of interest rate cuts, which typically lower the value of a currency. On Tuesday, the central bank left its interest rate unchanged but signalled a possible cut next year. The Polish zloty (EURPLN=) climbed 0.2% to its highest levels since April. Corporate sector wages rose more than expected in November, data showed. The MSCI index of overall emerging market stocks (.MSCIEF) slipped 0.2% and the currencies gauge (.MIEM00000CUS) was up 0.1%. Investors’ appetite for risk was further tempered by revived worries about AI, which dragged Wall Street’s benchmark indexes lower on Wednesday. Later, Latin American assets will be in the spotlight, with an interest rate decision due from the central bank in Mexico. Bolivia will also be in focus after Fernando Aramayo Carrasco told the Wall Street Journal that the government is seeking a financial lifeline from the U.S. administration.