Proudly sponsored by

Emerging stocks extend rally to over four-month highs

MSCI EM stocks index at highest level since late-February.
Image: Qilai Shen, Bloomberg

Emerging-market stocks reached their highest in more than four months on Monday, extending gains into a fifth session as strong economic data spurred bets on a swift economic recovery.

The MSCI’s index of developing-world stocks rose 1.8% to its highest since Feb. 26, with Chinese stocks the biggest boost to the index as the country’s business activity recovered steadily.

Strong economic readings from the United States and China last week had restored a measure of risk appetite, helping markets weather an increase in COVID-19 cases and concern over new lockdown measures in the developed world.

Russian stocks led gains among markets in Europe, the Middle East and Africa, on strength in its energy sector. Rising oil prices have helped Russian exporters, as well as the rouble.

“With an unprecedented amount of cash in the system, equities and high-yielding bonds are attracting a lot of interest from investors in the absence of acceptable yield from money markets and longer-term government bonds,” Hussein Sayed, chief market strategist at FXTM, wrote in a note.

“To keep this rally alive, we need more intervention from fiscal and monetary policymakers and for investors to believe that policies will be generous enough to provide further liquidity.”

Emerging-market currencies have diverged from equities over the course of the pandemic, with monetary stimulus measures also hurting returns from FX and fixed income.

Equities have been quicker to recover from the rout thanks to increased cash in the market, leaving currencies in a trough. This was reflected in the day’s movement, with most emerging- market currencies gaining little support from the increased risk appetite.

Russia’s rouble sank about 1% to the dollar due to local dollar demand, as well as the threat of possible British sanctions.

Turkish stocks added about 1.7%, while the lira was flat to the dollar. The currency is likely to face more selling pressure as Turkey struggles to rein in higher inflation bought about by the coronavirus outbreak.

Turkey’s central bank had held rates last month, citing upward price pressures caused by the pandemic.

Central European stocks rose while the Hungarian forint and Polish zloty were in a flat-to-low range against the euro.

Get full access to 's financial insights and support quality journalism.

Only R63 per month or R630 per year. You can cancel at any time.

COMMENTS   0

You must be signed in to comment.

SIGN IN SIGN UP

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: