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EM-Stocks Falls; S.African Rand Slides on ANC's Poor Showing

Nov 5 (Reuters) - Emerging market shares fell on Friday for an eighth session in nine, as Chinese material and technology stocks weighed, while South Africa’s rand slid 0.5% after the final count confirmed the ruling ANC party’s worst election outcome since 1994.

The rand moved closer to eight-month lows and was headed for a third straight weekly drop.

Voters punished South Africa’s governing African National Congress (ANC) in municipal elections with the final count showing it took 46% of the vote, as repeated corruption scandals weighed.

“How the 2022 Budget incorporates the government’s plan for a basic income grant will be key to watch. The ANC’s mid-2022 policy conference is also likely to illustrate its need to win back votes in future elections,” Citi strategists said.

“All this matters greatly to (President Cyril) Ramaphosa who will stand for re-election as ANC president at the end of next year.”

On the week, an index of EM currencies broke a three-week winning streak, down about 0.2%. But decisions by major central banks, including in the United States and UK, to delay policy tightening helped risky currencies.

Most EM central banks on rate hiking cycles to contain inflation raises the interest rate differentials that make them attractive for carry trade.

On Friday, most EM currencies outside Asia weakened.

The Russian rouble fell 0.4% in thin trading due to a public holiday after having slipped earlier in the week because of falling oil prices, while Turkey’s lira eased 0.1%.

Russia has expelled a journalist from a Dutch newspaper for “administrative violations”, the publication Volkskrant reported on Thursday, Moscow’s second move against a member of the Western media in three months.

MSCI’s index of emerging market shares fell 0.4% after snapping its eight-day winning streak in the previous session.

Mainland China shares lost 0.5% and 1% as coal miners fell amid China’s intensive measures to rein in coal prices and boost production, while property stocks slipped after Kaisa missed a payment.

Hong Kong stocks were weighed down by losses in the tech sector, while lender HSBC was hit by the Bank of England’s decision to hold rates.

Gains in Taiwan, Turkey and South Africa helped cap losses for the broader EM index, which is on course to end the week little changed.

Reporting by Susan Mathew in Bengaluru; Editing by Subhranshu Sahu

Source: Reuters

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