EM stocks scale eight-month high, helped by China boost; FX steady

Emerging market shares rose to eight-month highs on Tuesday, led by broad-based gains in Asia from Chinese measures to boost economic growth, while investors awaited fresh developments from the US-China trade talks.

Most developing currencies rose against a weak dollar, which was shackled by a combination of weak US economic data and gains for commodity-linked currencies.

MSCI’s index of emerging market stocks rose for the ninth straight session, with Chinese blue chips rising 0.4% after Beijing took steps to encourage urbanisation to support economic growth.

The broader Shanghai index slipped.

“We are seeing quite broad-based strength in EM currencies and equities this morning,” said William Jackson, chief emerging markets economist, Capital Economics.

“There’s no definite reason for the moves, but part of it may be due to investors paying more attention to US-China trade talks more than any other headline,” Jackson added.

South Korea’s KOSPI stock index recovered from earlier losses, rising for an eighth consecutive session — the longest run in two months — on foreign net purchases, with the Korean won strengthening.

Indian shares were volatile in a session marked by extreme swings, as investors geared up for March quarter company results beginning later this week, while the rupee slid marginally.

Stocks on Moscow’s MOEX index hit a record high, led by shares of energy and financial companies. Mobile phone operator MTS was among the top gainers on the possible acquisition of Russian online video streaming service ivi.ru.

Most emerging Asian currencies edged up as the dollar slipped, but the lack of fresh trading cues and the backdrop of slowing global growth kept movements small.

The Russian rouble edged higher, supported by high oil prices and investor expectations about upcoming treasury bond auctions, while Turkey’s lira rose marginally.

In emerging Europe, Hungary’s forint firmed slightly against the euro. Data showed the country’s core inflation adjusted for the effects of indirect taxes rose to 3.5% in March from 3.2% in February.

Investors also eyed developments related to Aramco, as orders for the Saudi oil producer’s debut international bonds topped $85 billion, sources familiar with the matter said, in a vote of market confidence.