EMERGING MARKETS-EM assets on hold ahead of Powell's speech; China stocks pop

By Pranav Kashyap

Aug 22 (Reuters) - Most emerging market assets stayed in a tight lane on Friday as investors braced for Federal Reserve Chair Jerome Powell's much‑anticipated speech later in the day, while Chinese equities bucked the trend.

The blue-chip CSI 300 Index .CSI300 jumped 2.1% to its highest level in over 10 months, while the Shanghai Composite Index .SSEC rose 1.4% to their highest in more than 10 years.

Technology stocks led the charge after DeepSeek rolled out an upgrade to its flagship V3 AI model, while reports that Nvidia NVDA.O asked Foxconn 2317.TW to halt work on the H20 AI chip buoyed Chinese chipmakers.

Elsewhere, Vietnamese stocks .VNI snapped a four-day winning streak, dropping 2.5%.

In Central and eastern Europe, Polish equities .WIG20 dropped 3.4%, on course for its biggest intraday drop in more than four months.

The country's banking stocks .BKNI plunged 5.8% after the government planned to hike corporate income tax for banks to 30% in 2026.

The zloty EURPLN= slipped 0.3% against the euro.

A gauge tracking the region's stocks .MIME00000PUS fell 3.2% to a more than two-week low.

Meanwhile, Turkish stocks .XU100 hit fresh record highs, finally closing the gap with the broader EM equity gauge after March's slide following Istanbul mayor Ekrem Imamoglu's detention. The lira TRY= edged up 0.2%.

MSCI's gauge for equities in emerging markets .MSCIEF edged up 0.1%, while its currencies counterparts .MIEM00000CUS was steady.

EM momentum stalled this week, with the equity index set to break a two‑week winning streak as traders hunker down for Powell's speech at 1400 GMT, hunting for hints of a September rate cut in the wake of recent signs of job market weakness.

But recent hawkish notes from U.S. officials and inflation-tinged data have tempered the mood.

The CME FedWatch tool now pegs the odds of a 25-basis point cut at 71.3%, down from 92% last week.

"We expect the speech to be non-committal about whether to cut at the September meeting," Societe Generale's cross-asset research analysts said.

"With inflation moving farther away from target and job growth slowing, the Fed is in a tough spot."

Meanwhile, there were few breakthroughs on the Russia–Ukraine peace talks front. U.S. President Donald Trump said on Tuesday the United States could offer air support as part of a potential deal to end the war.

An energy facility in Russia's Bryansk region, Unecha —traversed by the Europe-bound Druzhba oil pipeline — caught fire after reported Ukrainian missile and drone strikes.

Crude flows to Hungary via the Druzhba pipeline were halted following the attack. The Hungarian forint EURHUF= slid to a two‑week low, set for its sharpest daily drop in more than four months.

The Russian rouble RUB= was largely unchanged, while Ukraine's international dollar bonds nudged lower.

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