EMERGING MARKETS-Emerging market stocks post first weekly drop this year
China, HK stocks end the week lower
Moody's says Adani stock rout can hurt its ability to raise debt
Czech crown stays near 14-year highs after rates kept on hold
Turkey inflation higher than expected, lira subdued
EM stocks off 0.5% and down 1% this week
By Bansari Mayur Kamdar
Feb 3 (Reuters) - Emerging market stocks fell on Friday, and were on track for their first weekly fall since the start of the year, driven by weakness in Chinese stocks after the world's second largest economy came back from its Lunar New Year break.
The MSCI's index for emerging market stocks slipped 0.5% by 0905 GMT and was set to snap its five-week winning streak after its January rally, supported by hopes of recovery in China as it lifted its strict COVID curbs.
China's blue-chip CSI 300 Index and the Shanghai Composite Index closed 1.0% and 0.7% lower, with foreign funds halting their buying spree after nearly a month of net inflows, as investors examined China's economic recovery.
Hong Kong's Hang Seng Index fell 1.4% and ended the week 4.5% lower.
"While Hong Kong equities have partially priced in the upside from mainland China’s reopening, tourist and capital inflows are likely to continue to support the city's tourism, finance, retail, Macau gaming, and insurance industries," said Mark Haefele Chief Investment Officer, UBS Global Wealth Management in a note.
A private sector survey showed China's services activity in January expanded for the first time in five months.
Indian shares notched weekly gains but the focus remained on Adani group shares, which have lost over $100 billion in market value after a U.S. short-seller report.
Credit ratings agency Moody's warned that the sell-off in Adani group's shares could reduce the Indian conglomerate's ability to raise capital, while its peer Fitch saw no immediate impact on its ratings.
Currencies in emerging markets rose for a second straight week supported by a weak weekly show by the U.S. dollar as markets took a dovish view on rate guidance from major central banks this week.
The Turkish lira was flat against the dollar after data showed its annual inflation dipped to 57.68% in January but was well above forecasts despite a favourable base effect that is expected to carry on until President Tayyip Erdogan seeks re-election in May.
"Given the election timeframe, it has therefore become highly likely that CBT will lower interest rates again in the coming months," said Tatha Ghose, FX analyst at Commerzbank Research in a note.
"The next round of lira volatility may be nearing."
The dollar index crawled up on Friday, dragging currencies in emerging markets 0.4% lower.
The Czech crown hovered near its highest level in 14 years against the euro after its central bank signalled overnight rates would stay elevated and welcomed the strong crown.
Russia's rouble inched higher at 70.35 against the greenback as markets awaited details from the government about its plans to intervene in the currency markets. For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX
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For RUSSIAN market report, see (Reporting by Bansari Mayur Kamdar in Bengaluru; editing by Barbara Lewis)