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Stocks fall 1.2%, currencies dip 0.1%

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President Zelenskiy offers to drop NATO ambitions

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Several central bank decisions this week

By Niket Nishant

Dec 15 (Reuters) - Emerging market stocks were set to

wipe out last week's gains on Monday as political conflict,

concerns over China's property sector and anxiety about a tech

bubble prompted investors to pull back.

The moves threaten to slow momentum in regional assets as a

volatile but strong year draws to a close and may curb their

appeal as an alternative destination for foreign capital looking

beyond the United States.

MSCI's index of emerging market stocks fell nearly

1.2%, erasing last week's gains. The currencies index

dipped 0.1%.

ECONOMIC DATA, GEOPOLITICS TAKE CENTRE STAGE

China's real estate stocks index fell 2.1%

after bondholders rejected China Vanke's initial

plan to push back payment by a year, raising the risk of default

for the state-backed developer and renewing concerns about the

sector.

The wider economic backdrop offered little relief, with data

showing that the second-biggest global economy's factory output

growth slowed to a 15-month low in November, while retail sales

posted their worst performance since December 2022.

The blue-chip CSI300 index and the Shanghai

Composite Index each fell 0.6%.

"Policymakers have lots of work to do if domestic demand is

going to drive growth in 2026 as planned," economists at ING

wrote in a note.

In Ukraine, most dollar-denominated bonds were trading

slightly higher.

President Volodymyr Zelenskiy offered to drop the country's

aspirations to join the NATO military alliance, meeting one of

Moscow's longstanding demands, but the jury is still out on how

transformative the pledge will be for peace talks.

Diplomatic efforts have intensified in recent weeks, and any

credible breakthrough would remove a major overhang on global

assets.

In the Middle East, tensions resurfaced after Hamas chief

negotiator Khalil al-Hayya said Israel's assassination of a

senior Hamas commander threatens the viability of the Gaza

ceasefire.

Israel's shekel was 0.2% weaker against the dollar,

while the stock index climbed 0.5%.

The South African rand rose 0.2% and was headed for its

fourth consecutive day of gains if current levels hold,

supported by higher gold prices.

Elsewhere in Africa, Fitch Ratings upgraded Ivory Coast's

long-term ratings. Some of the country's Eurobonds inched up.

CENBANK DECISIONS DUE

The week brings a number of central bank decisions that will

shape policy expectations for the year ahead and could inject

renewed volatility into markets, notably in currencies, that

have already seen heavy swings this year.

Later on Monday, attention will turn to Latin America, another

corner of the emerging market universe, where Chile will be in

the spotlight after Jose Antonio Kast won the presidential

election on Sunday, underscoring the country's most pronounced

shift to the right since the end of the military dictatorship in

1990.

With several elections scheduled across the region next

year, markets are bracing for the volatility that typically

accompanies major political contests.

Investors are also contending with renewed unease over

stretched AI valuations after Oracle's earnings

forecast last week reignited questions about whether the

sector's heavy investment spending is sustainable.

"AI is clearly transformative, but that doesn't protect

markets from the classic signs of a bubble. Valuations are

stretched, concentration is extreme, and sentiment is shifting

toward euphoria," said Lukman Otunuga, senior market analyst at

FXTM.