EM equities end higher

Emerging stock markets rose yesterday, led by a boost for China from signs of more trade dialogue with the United States, while Indian markets steadied after a dive sparked by the abrupt departure of central bank Governor Urjit Patel.

Shanghai’s main indices and Hong Kong shares all ended higher after Beijing’s Commerce Ministry said Vice Premier Liu He had discussed the road map for the next stage of talks with senior US officials on Tuesday.

That steadied stock and other financial markets globally after the latest round of selling on Monday driven by nerves over global growth, the trade conflict and political risks like Britain’s increasing messy exit from the European Union.

On the trade issue, news of the talks with Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer offset several days of nerves driven by the arrest of the financial head of Chinese mobile phone maker Huawei.

“The US and Chinese authorities are trying to keep trade talks separate from diplomatic disagreement about the arrest,” Societe Generale FX strategist Kit Juckes said in a note. “(The) global risk rout faded as US equities steadied and Asian ones have bounced modestly this morning.

Bonds are steady, and the mood is calmer.” Most developing world currencies gained against a soft dollar with the Indian rupee recovering sharply after Patel’s resignation following months of political pressure sparked its worst day since August 2013 in the previous session.

With Prime Minister Narendra Modi’s ruling party facing a stormy run-in to elections in the first half of next year, investors worry the changes at the bank could represent a challenge to its independence.

“There is a possibility of some crisis of confidence among investors, at least in the near term,” said Anindya Chatterjee, Lead Portfolio Manager for Emerging Markets Strategy at Canadian asset manager Fiera Capital.

“But the country’s robust democratic political framework has historically brought in checks and balances, and we are hopeful.... growth will prevail — including the autonomy of the central bank,” he added.

The Turkish lira tumbled by 1.4% with some analysts citing concerns that lower than forecast gross domestic product numbers for the third quarter pointed to a slide into recession.