A move higher in major Asian markets as they returned from the Lunar New Year holiday propped up emerging-market shares on Monday, with China stocks in the lead as new US-China trade talks began before higher-level talks later in the week.
Mainland China stocks rose more than 1% each as they caught up after a week’s holiday, while those in Hong Kong, South Korea and Taiwan rose 0.2% to 0.7%.
“It a delayed reaction to the gains we had in the US equities for the last couple of weeks,” said Koon Chow, an emerging-market macro and FX strategist with UBP, pointing also to some local expectation from the US-China trade talks.
A new round of trade talks began in Beijing on Monday, with markets awaiting talks led by US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin later this week.
They comes after US President Donald Trump said he would not meet with his Chinese counterpart before the March 1 deadline set by the two countries to resolve the trade dispute.
“The market is expecting the deadline to be extended so people are not prepared to be too negative at this point,” said Steven Leung, director of sales at UOB Kay Hian in Hong Kong.
Some other markets fell, however, capping the gains in MSCI’s index of emerging market shares. Worries over global growth persist as investors await the outcome of the trade talks.
Shares in Turkey climbed 1.7% and were on track for their best day in two weeks. Russian shares rose for the first time in four sessions.
With the dollar eyeing an eight straight session of gains, currencies of developing world economies weakened.
The Chinese yuan was the biggest mover, down half a percent with all eyes on trade talks.
“If the upcoming high-level trade negotiation fails to reach some practical agreements and save some time for a Trump-Xi meeting, risk-averse market sentiment will continue … And it will boost the dollar, especially USD/RMB,” said Stephen Chiu, FX and rates strategist at China Construction Bank (Asia) in Hong Kong.
The Turkish lira weakened 0.3%. Oil exporter Russia’s rouble tracked crude prices lower. The rouble had gained earlier after ratings agency Moody’s raised the country’s sovereign rating to investment grade.
Among Eastern European economies, Romanian shares fell for the first time in seven sessions. Most currencies in the region barely moved against a weaker euro.