MARKET REPORT Emerging markets stocks trade green

Emerging market shares shrugged off disappointing Chinese trade data yesterday that clouded an otherwise bright outlook for global growth, while South Africa’s rand steadied ahead of a no-confidence vote against president Jacob Zuma.

China’s bourses initially stumbled after Beijing reported exports and imports both grew much less than expected, but recovered by the close as MSCI’s fast-charging emerging market index headed for its third day of gains.

The rand firmed 0.2 per cent to 13.19 per dollar having surged as much as 1.7 per cent on Monday when the vote – which will be held as a secret ballot – was announced.

Stocks in Johannesburg touched an all-time high in early trading as they climbed 0.2 per cent and added to their 13 per cent rise over the last two months

Morgan Stanley said if Mr Zuma did ride out the vote the rand would stay as one of this year’s underperforming emerging markets currencies. In contrast if he loses, the currency would rally on bets of political turnaround akin to Brazil last year, they said.

In Brazil, Michel Temer’s government faces its first test since corruption charges were shelved by the Congress there last week. The real was flat at 3.125 per dollar in Europe. Parliament is expected to vote on a modest pension overhaul as soon as October.

Mexico’s peso was near a one-month low hit on Monday as the impending start of talks to renegotiate the North American Free Trade Agreement (Nafta) gave the market a renewed bout of jitters.

The peso sank to a record low in January on fears that US president Donald Trump would rip up NAFTA, but it has rallied hard since as his administration has taken a more conciliatory tone and moved to renegotiate the 23-year-old accord.

However, markets are again getting cautious as the three Nafta members – the US, Mexico and Canada – head towards talks in Washington on August16 to revamp the deal, which underpins some US$1 trillion in annual trilateral trade.

Despite China’s trade data wobble, which still grew 8.8 per cent overall, was the slowest rate this year, the yuan strengthened 0.3 per cent to a 10-month high against the dollar.