Emerging market stocks slide on tech selloff ahead of Turkish rate decision

what happened

Reuters reports that MSCI's emerging markets index dropped 2.3% on Thursday, returning to its early August low. Technology stocks and pricier oil weighed on the benchmark, with South Korea, Taiwan and Hong Kong among the weakest markets. China's CSI 300 hit a 15-month low, 20% below its record, which by some definitions counts as a bear market.

Analysts cited several drivers: worries about spending after Meta announced plans to raise capital, profit-taking after a strong early-year rally, and geopolitical tensions. Crude climbed 3% to $112 a barrel after fresh Houthi strikes in Saudi Arabia and Iranian media reports of blasts in the south of the country. The IMF expects output in the Middle East, North Africa and Pakistan to shrink 1.3% this year because of the conflict.

Turkey's central bank is expected to cut rates by 100 basis points later in the day, resuming its easing cycle. The lira was flat against the dollar and stocks dipped 0.5%. ING's Frantisek Taborsky called September inflation a positive signal, while fund-related developments point to downside risks for the economy in the final quarter. South Africa and India saw their currencies fall 0.7% and 0.4%. Indonesia announced market reforms, and Kyiv's 2034 and 2036 bonds edged higher.

why it matters

For markets, the mix of oil risks, Chinese equity weakness and an expected Turkish rate cut points to a cautious mood across emerging economies, especially net energy importers whose currencies are under pressure. Investors will watch the Turkish decision and the oil price.

market impact

EM equities and currencies of net oil importers: higher crude and tech weakness add pressure

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