Publications
Partners
London - Emerging markets rose as commodity producers led stocks to the highest level in eight months and currencies advanced amid prospects for stimulus in major economies.
Chinese shares traded in Hong Kong advanced for a third day on speculation the nation’s leaders are taking steps to support investor sentiment.
Malaysian stocks gained with bonds after the central bank unexpectedly cut interest rates, while Vietnamese equities rallied the most in the world to the highest level since 2008.
A measure of currencies advanced for a fifth day to a two-month high.
Emerging markets have recovered losses spurred by Britain’s vote to leave the European Union amid speculation the fallout from the decision will be contained.
The Bank of England is seen easing policy this week, while Japan’s Prime Minister Shinzo Abe ordered his economy minister to compile stimulus measures this month and futures traders see only a 34% chance the Federal Reserve will raise interest rates by year-end.
"It’s an ongoing rally, driven by dovish central banks," said Daniel Salter, the head of equity strategy at Renaissance Capital in London.
Stocks
The MSCI Emerging Markets Index rose 0.5% to 858 at 2:08 p.m. in London. The gauge has advanced 8.1% this year and trades at 12.2 times its 12-month projected earnings. The MSCI World Index of developed markets has increased 1.9% and is valued at a multiple of 16.2 times.
An index of Gulf stocks climbed to the highest since May 2 after Brent crude surged the most in two months on Tuesday. The oil minister for Kuwait, which is planning to sell minority stakes in units of the state oil producer, said he expected crude to rise to a range of $50 to $60 a barrel until at least 2018. Qatar’s Index gained 1.8%.
Hong Kong’s Hang Seng China Enterprises Index advanced 0.6%. Data on Wednesday showed overseas shipments in dollar terms fell 4.8% in June from a year earlier, while imports dropped 8.4%.
Both exports and imports in yuan terms looked better, with outbound shipments eking a small gain, reflecting the influence of a weakening currency.
Brexit recovery creates bargains among some consumer stocks in developing nations including Brazil and China, Mark Mobius, executive chairman of Templeton Emerging Markets Group told Frontera in an interview.
Eastern Europe will be a winner from Brexit as some UK manufacturing and financial services companies move to that region and broader Europe, where there are lower labour rates and better productivity, he said.
Bank Pekao led Polish stocks lower, tumbling 6.2%. The shares headed for the biggest one-day decline in more than two years after Italy’s UniCredit said it was selling as much as 10% of the nation’s second-biggest bank to raise capital.
Currencies
The MSCI Emerging Markets Currency Index gained 0.2%. The Mexican peso and Colombian peso both climbed 0.5%. Brazil’s real advanced 0.2%.
For more news and analysis on investing in Latin America, click here. In emerging Europe, the Turkish lira weakened 0.2% against the dollar, after climbing to the strongest level this month on Tuesday. Hungary’s forint climbed 0.2% versus the euro.
Bonds
Malaysian government bonds rose, with the three-year note yield dropping five basis points to 2.99%. Bank Negara Malaysia lowered the overnight policy rate to 3% from 3.25%, joining Asian counterparts from Indonesia to Taiwan which have eased policy this year to bolster their economies.
Goldman Sachs Group was alone among the 18 economists surveyed that had projected the move.
Indian bonds extended a rally that’s driven benchmark yields to a three-year low as foreign holdings of local debt climbed the most since March and an inflation gauge rose in line with estimates.
BlackRock Inc. is overweight local debt in India, Brazil and Russia, Scott Thiel, deputy chief investment officer for fundamental fixed income at the world’s largest asset manager, said in London on Tuesday.
"We have active positions in these markets. It’s a confluence of changes in the economic policy, changes in inflation profile, stabilization of oil prices," he said.
