* Turkish stocks down nearly 1%
* Hungarian c. bank expected to hold rates later in the day
* EM stocks index set to snap 3-day winning streak
Nov 17 (Reuters) - Emerging market stocks edged lower on Tuesday as worries about the economic damage from the COVID-19 pandemic resurfaced after lockdowns were reinstated in some parts of the world, although optimism around another promising vaccine helped limit losses.
MSCI’s emerging markets equity index was down 0.2% and set to snap a three-day winning streak, while Turkey’s BIST 100 share index slid 1%.
The Turkish lira also weakened 0.5% after rallying about 11% last week on expectations of more orthodox economic policy following a major shake-up in the country’s leadership.
All eyes later in the week will be on the central bank’s first policy meeting under its new governor, Naci Agbal, and market participants widely expect the central bank to sharply raise its policy rate to 15% from 10.25%, according to a Reuters poll.
“Policymakers have given a strong hint that there will be this shift back to orthodox economic policymaking, but we don’t know,” said William Jackson, chief emerging markets economist at Capital Economics.
“It’s possible that investors may be re-assessing the outcome of the meeting and the likelihood that the CBRT might disappoint expectations.”
Other regional currencies, however, received some support from a weaker dollar after drugmaker Moderna became the second U.S. pharmaceutical company in a week to report positive results from trials of a COVID-19 vaccine.
The announcement sparked a rally in global financial markets on Monday, but optimism in the developing world has been subdued due to a continued rise in coronavirus cases and doubts about the timeline of vaccine distribution.
Several U.S. states enforced tighter limits on social interactions after a record rise in hospitalizations for treatment of COVID-19, while Russia reported a record daily jump in deaths related to the novel coronavirus.
South Africa’s rand dipped 0.2% ahead of its own central bank meeting later this week and likely credit reviews by ratings agencies Standard & Poors and Moody’s.
Analysts at Societe Generale said they expect the South African Reserve Bank to keep interest rates unchanged as “domestic fiscal risks argue for a conservative monetary policy stance.”
A basket of emerging market currencies was up 0.2% by 0908 GMT, while central European currencies were broadly weaker against the euro.
The Hungarian forint eased 0.4% ahead of a central bank meeting later in the day, where it is also widely expected to leave key interest rates unchanged. For GRAPHIC on emerging market FX performance in 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, see tmsnrt.rs/2OusNdX
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