Emerging Markets round-up: Pakistan’s dollar bonds climb

Emerging market assets were listless on Wednesday as investors stayed on the sideline ahead of central bank policy decisions including the Federal Reserve, while Pakistan’s dollar bonds gained on the IMF’s provisional agreement to disburse $1.1 billion.

The MSCI index for stocks edged up 0.1 per cent after dropping nearly 1 per cent on Tuesday, while the currencies gauge slipped 0.1 per cent, set for its seventh straight day of decline.

Pakistan secures final installment of $1.1b SBA with IMF

The world’s most influential central bank, the US Fed, is widely expected to keep rates steady later in the day, but their new economic projections could potentially signal later and fewer cuts than previously estimated.

CHINA

Among others, China left benchmark lending rates unchanged at a monthly fixing, in line with expectations. Indonesia, too, kept key rates steady as forecasted, and reaffirmed that monetary policy could be eased in the second half of the year.

China’s blue-chip and Shanghai Composite indexes advanced 0.2 per cent and 0.6 per cent, with Tencent Music Entertainment Group’s Hong Kong shares jumping 11 per cent following a fourth-quarter revenue beat. The Indonesian rupee was unchanged against the greenback.

PSX closes 200 points above opening level

“China will continue to let fiscal policy do the heavy lifting for the economy, while the monetary policy will play a more supporting role,” said Kelvin Lam, senior economist at Pantheon Macroeconomics.

PAKISTAN

The International Monetary Fund said it reached a staff level agreement with Pakistan, which if approved, will disburse $1.1 billion for the indebted South Asian economy also saddled with a balance of payment crisis.

The 2027-maturing bond was up at 84.336 cents on the dollar, while the 2025 bond rose to 92.466 cents on the dollar.

SOUTH AFRICA

On the economic data front, South Africa’s consumer inflation rose for the second month in February to 5.6 per cent annually from 5.3 per cent in January. The rand ZAR= was down 0.2 per cent against the dollar.

“The larger-than-expected rise in headline inflation rate means that the South African Reserve Bank (SARB) is likely to delay the start of its easing cycle until after May’s election,” David Omojomolo, an Africa-focused economist with Capital Economics wrote.

OTHERS

The Czech central bank will announce its policy decision later in the day, expected to deliver a 50-basis-point rate cut. The crown, which has taken a hit this year along with the Hungarian forint on continued rate cuts, was flat against the euro.

Gold prices increase by Rs 500 per tola in Pakistan

Data showed Polish corporate sector wages rose by an annual 12.9 per cent in February, above forecast, while another set showed producer prices (PPI) fell 10.1 per cent annually in February, below forecast. Polish currency (zloty) slipped 0.2 per cent against the euro.

Later in the day, Brazil is expected to detail its policy decision, expected to cut rate by 50 -basis-point. Mexico and Colombia’s policy decisions are also due this week.