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Foreign investors sell 7.2 bln yuan Chinese shares

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South Africa rate decision due

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Gulf stock markets fall as oil prices decline

By Ankika Biswas

March 27 (Reuters) - Emerging market stocks and

currencies indexes fell on Wednesday, as investors continued

their hunt for clues on the outlook for U.S. monetary policy

easing, with Chinese stocks dropping to around one-month lows on

strong foreign capital outflows.

Both the MSCI index for EM stocks and the

currencies gauge shed 0.3% as of 0930 GMT.

The dollar was largely firm on more strong U.S. economic

data, adding to uncertainties about rate cuts, while the global

focus is on Friday's U.S. core inflation figures.

"Resilient global growth especially, in the U.S. and

loosening financial conditions have marginally improved global

emerging markets' macroeconomic conditions since the end of

2023," said Chief Emerging Markets Economist Elijah

Oliveros-Rosen at S&P Global Ratings.

"Despite improving conditions, EMs will still face

significant obstacles this year that will keep economic paths

highly vulnerable. These include the lagged effects of high

interest rates and a drag from an eventual slowdown in U.S.

growth, which we expect will be more noticeable in the second

half of 2024."

China's blue-chip CSI300 shed 1.2% and the

Shanghai Composite index fell 1.4%. Foreign investors sold a net

7.2 billion yuan ($996.00 million) of shares via Stock Connect,

logging the biggest daily outflow since mid January.

The yuan also weakened on the dollar's strength, despite

strong fixing to support the currency and improving economic

data on industrial firms posting higher profits.

The yuan's slide has prompted speculation that authorities

are deliberately but slowly engineering a light depreciation of

the currency.

Stock markets in the Gulf also dropped, tracking a slide in

oil prices. Egypt's EGX 30 index shed nearly 0.9%.

Later in the day, South Africa will disclose its monetary

policy decision, widely expected to keep its repo rate steady at

8.25%. Both stocks and the rand were largely unchanged

ahead of the decision.

Hungary's forint held firm among regional peers,

rising 0.2% against the euro. Its central bank cut its base rate

by 75 basis points on Tuesday, adding it will slow the pace of

cuts from second quarter.

Elsewhere, the International Monetary Fund reached a

staff-level agreement with Serbia on the third review of the

country's two-year stand-by arrangement, which would make 400

mln euros available to Belgrade if approved by the Executive

Board.

HIGHLIGHTS:

** China to promote currency swaps, strengthen monetary

cooperation

** ANALYSIS- Lucrative foreign exchange trade sustained by

low volatility

** India c.bank keen to further build up record high FX

reserves- sources