Manila - Emerging-market stocks rose, extending a fifth week of gains, as optimism central banks will keep interest rates low and a rising oil price spurred demand for yield.
Benchmark indexes in Vietnam and Turkey and Hong Kong-listed Chinese shares have all advanced at least 3% this week as investors have become more confident about the outlook for global growth.
A gauge of developing-nation currencies dropped for a second day after rising to a one-year high earlier this week. The baht weakened after police reported a series of bombs had exploded in southern Thailand. The yuan fell as data pointed to a slowdown in China’s economy.
“Quantitative easing and the accommodative stance of central banks is creating a lot of liquidity and these funds in search of yields are finding their way into emerging markets,” said Rafael Palma Gil, who helps manage about $1.8bn as a trader at Rizal Commercial Banking in Manila. “The rebound in oil prices is benefiting crude exporters. It is also feeding hope that global demand could be picking up."
Emerging-market stocks and currencies have risen to the highest levels in a year this week as dovish policies from policy makers in Japan to the UK fueled risk appetite. While traders expect the Fed to delay raising rates at least until early next year, some investors are questioning the outlook for further gains given the rising political risks across developing nations.
Stocks
The MSCI Emerging Markets Index of shares climbed 0.2% as of 07:14 on Friday, extending its gain since August 5 to 2.7%. The fifth week of gains is the longest since the period ended March 7, 2014.
Vietnamese stocks headed for their best week in 13 months after the country’s largest listed company was added to an MSCI index. Vietnam Dairy Products JSC, or Vinamilk, climbed 1.8% on Friday and 8.9% since August 5 after MSCI said on Thursday it would add the company to its frontier markets index.
“The rally in the oil price and generally strong sentiment have played a part but Vinamilk’s performance has been a major contribution,” said Kevin Snowball, chief executive officer of PXP Vietnam Asset Management in Ho Chi Minh City. The stock will “doubtless” be added to the two Vietnam exchange-traded funds next month, he said, adding that he remains “very bullish” for the rest of the year.
The benchmark Index rose 0.2%, taking its gain this week to 5.5%.
The Hang Seng China Enterprises Index, which tracks mainland shares traded in Hong Kong, climbed 1.4% on Friday, extending its advance this week to 4.7%. Turkey’s Borsa Istanbul 100 Index has risen 3.9% since August 5.
Currencies
The MSCI Emerging Markets Currency Index dropped 0.1% after closing on Wednesday at the highest level since July 2015.
The Thai baht fell from the strongest in a year after police reported bomb explosions had killed at least two people in tourist resort areas in the south of the nation.
The baht weakened 0.2% after earlier appreciating to the highest since July 2015.
The yuan pared a weekly gain as Chinese data from factory output to investment suggested an economic recovery may be losing momentum. Official data for industrial production, retail sales and fixed-asset investment released on Friday all fell short of economist’s estimates.
China’s currency weakened 0.1%, reducing its five-day advance to 0.2%. Malaysia’s ringgit fell 0.2% and the South Korean won slipped 0.1%.