Emerging shares rise on trade hopes, China data; Turkey’s lira drops

Emerging market shares rose on Monday on optimism that US-China trade talks could be nearing the final round, while easing fears of a slowdown in global growth on signs of stabilisation in the Chinese economy further boosted risk sentiment.

MSCI’s index of emerging market shares rose 0.1% in an Easter holiday-shortened week, but pared some gains as China shares closed lower.

Over the weekend, US Treasury Secretary Steven Mnuchin said he hoped US-China trade talks were approaching their final lap. Meanwhile, Chinese data showing exports rebounded in March to a five-month high while new bank loans jumped by far more than expected.

“US and China have been actively keeping alive hopes that a trade deal is within reach. This, coupled with better-than-expected China data in March,” took shares higher, DBS analysts wrote in a note.

While most Asian shares rose – with trade-reliant indices in South Korea and Taiwan rising more than 0.4% each, mainland China stocks reversed gains of more than 2% each to end lower as analysts warned that the data is backward looking.

“It (the lending) has already happened, so there can’t be sustained support for share prices,” said Cao Xuefeng, a Chengdu-based analyst at Huaxi Securities. Investors now look to first-quarter economic growth data due Wednesday for further clues on the economy.

Equities in South Africa and Turkey also slipped, but Russian shares added nearly 0.3%.

Among currencies, a weaker dollar helped some Asian currencies make small gains.

Elsewhere in the developing world, South Africa‘s rand climbed 0.3%, while Russia’s rouble firmed 0.2%.

Meanwhile, Turkey’s lira extended losses to a third straight session, down 0.6%. 

Official data showed that Turkey’s unemployment rate surged to 14.7% in the December-February period, its highest level in almost 10 years.

The currency, still recovering from a crisis last year, has been pressured recently by a cocktail of negative factors – worsening ties with the United States, a recount of local elections re-confirming President Tayyip Erdogan’s AK Party loss in Istanbul, and rising inflation.

On Friday, ratings agency Moody’s said that a reform package that Turkey presented last week provided little detail and was vague on a timetable for helping revive an economy plagued by inflation and recession.