EMERGING MARKETS-EM stocks edge lower as oil's retreat eases investor concerns
By Twesha Dikshit
March 20 (Reuters) - Emerging market stocks ticked lower on Friday, with a retreat in oil prices soothing some investor nerves after the U.S. and its allies offered to join efforts to secure passage through the Strait of Hormuz and boost global oil supply.
The war in the Middle East has upended markets and sent oil prices soaring as attacks on energy infrastructure along with supply concerns have added to inflation worries.
In a week filled with central bank meetings, most policymakers opted to keep rates steady, while saying they were on alert to tighten monetary policy to deal with inflation if necessary.
Traders no longer expect a rate cut from the U.S. Federal Reserve this year, and bets of hikes from the Bank of England and the European Central Bank have firmed.
The MSCI emerging markets equity index .MSCIEF dipped 0.4%, while a gauge for currencies .MIEM00000CUS was flat. Both indexes were set to end the week little changed after a sharp pullback in the two weeks since the U.S.-Israeli war on Iran began.
"Despite recent volatility from geopolitical tensions and higher oil prices, we maintain our constructive outlook on EM equities as fundamentals remain resilient and history shows such shocks are typically short-lived," UBS analysts said in a note.
They said their preferences included mainland China, China's tech sector, India, South Korea, Brazil, Malaysia and Indonesia.
MARKETS MIXED AS MIDDLE EAST WAR DEVELOPMENTS MONITORED
Stock indexes in emerging Europe were higher, with those in Greece .ATG, the Czech Republic .PX and Hungary .BUX adding between 1.1% and 1.4%.
Czech President Petr Pavel signed the 2026 budget into law, replacing the provisional plan in place despite concerns over the amount of defence spending planned, his office said. The crown EURCZK= ticked lower against the euro.
Meanwhile, the EU will find ways to pay out the promised loan of 90 billion euros ($104.2 billion) to Ukraine despite Hungary's continued resistance, Commission President Ursula von der Leyen said.
EU leaders voiced frustration with Hungary's Viktor Orban, who has cited a dispute over a war-damaged pipeline to block the loan. Ukraine's international bonds suffered their biggest fall since the start of the year on Thursday, with many maturities down around 2 cents.
Turkey's benchmark index .XU100 dropped marginally while South Africa's .JTOPI gained 1.6% after a large fall in the previous session.
Regional currencies were mostly lower against the euro, with the Hungarian forint EURHUF= remaining under pressure and last down 0.9%.
In the Middle East, bourses were mixed, with those in Egypt .EGX30 and Oman .MSX30 adding 3.4% and 1.3%, respectively. Indexes in Qatar .QSI and Bahrain .BKP were lower.
BofA Global Research flow data showed that EM equity outflows resumed to $4.8 billion. For debt, the figure amounted to $3.3 billion over the past two weeks.
J.P.Morgan data showed EM equity outflows worsened to $5 billion from $3.1 billion last week. Asia ex-Japan continued to see a heavy selloff, while EMEA outflows narrowed significantly and LatAm saw inflows after last week's brief selloff.
For TOP NEWS across emerging markets nTOPEMRG
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB
