Emerging market stocks snap five-session losing streak
Currencies broadly firm against euro, ruble gains
TOKYO: Emerging market stocks gained on Friday for the first time in six sessions, helped by hopes of further stimulus, a factor which also helped developing world currencies hold their ground against the dollar.
The sentiment played into a 0.3 percent rise seen in MSCI’s developing world stocks index, with the benchmark on track to post gains for only the second time in 18 trading days. Morten Lund, an analyst at Nordea Markets, said the stimulus would also benefit currencies of countries closely linked with the supply chain, especially those in Asia, though the possibility of a weaker yuan had to be kept in mind.
“We think USD/CNY is an extremely important sentiment gauge ... if it goes beyond 7.3 (yuan per dollar), we will go from a risk-off situation to a complete panic!,” Lund said. MSCI’s emerging market currencies index ticked 0.1 percent higher.
Taiwanese equities added 0.9 percent. Hong Kongtraded stocks also gained 0.9 percent, rising for a third straight session. Turkey’s lira was 0.5 percent firmer on bearish technical factors for the USD/TRY pair, while stocks rose 0.2 percent. Data earlier in the day showed industrial production in the country fell 3.9 percent year-on-year in June, logging its tenth consecutive month of decline after the economy tipped into recession last year.
Russia’s ruble strengthened 0.2 percent, while stocks advanced 0.3 percent, aided by a 1.6 percent rise in the price of oil , a key Russian export, which aided energy companies listed in Moscow.
South Africa’s rand strengthened 0.6 percent while equities fell 0.3 percent. Petrochemicals firm Sasol shed about 13 percent after it delayed the release of its annual results due to possible “control weaknesses” at its US ethane cracker project. Emerging European currencies were broadly firmer against the euro, with Poland’s zloty 0.4 percent stronger against the common currency, while Hungary’s forint was 0.2 percent firmer. Nordea Markets’ Lund said he prefers central and eastern European currencies to their Asian and Latin American peers, despite worries regarding the euro zone economy and risks arising from Brexit. — Reuters