EM stocks dip, Chinese shares seen falling further

Emerging market stocks dipped on Tuesday, and Chinese shares were seen weakening further on concerns of Beijing trimming support to an economy whose recent performance has beaten expectations.

Surprisingly steady growth data for the first quarter and comments from the Chinese central bank and policy makers have fuelled expectations of a reduction in monetary stimulus.

Brokerage Shanxi Securities said it had seen a clear move towards marginal tightening and it was expecting more “corrections” as the stock market reacted.

MSCI’s index of developing world stocks drifted marginally lower, while China’s Shanghai SE Composite Index slid half a percent and the mainland’s blue-chip equities fell 0.2%.

The Shanghai SE Composite has already tumbled 1.7% on Monday and is on course for its worst weekly performance since December 2018.

A firm US dollar kept gains among developing world currencies in check although a rise in oil prices to a 2019 high aided the currencies of net energy exporters such as Russia, whose rouble firmed 0.2%, while keeping pressure on those of net importers such as India, whose rupee weakened.

Russian stocks lifted 0.4%, gaining for a third straight session. Energy stocks and financials propped up the benchmark and set it on track for an all-time closing high.

Turkey’s lira weakened marginally in local holiday-thinned trade.

South Africa‘s rand was 0.3% softer while local stocks edged up 0.1% on gains among chemicals and energy firm Sasol and woodfiber firm Sappi.

Emerging European currencies broadly firmed against the euro, with Croatia’s kuna 0.2% stronger.

The Polish zloty softened 0.1% against the euro. Data for March showed a slowdown in retail sales growth to 3.1% year on year, less than the 3.9% expected by economists in a Reuters poll.