Emerging stocks trim August as South Korea gains

Emerging-market stocks rose on Friday, headed for their biggest weekly gain in nearly six weeks, as Asian equities advanced. An index of developing-world currencies rose after reaching its lowest in more than nine months on Thursday.

South Koreans stocks rose 1.8%, their best performance in over seven and a half months. The country’s central bank left interest rates unchanged on Friday but is widely expected to cut them at its next meeting, in October. A day earlier, the government proposed an increase in spending next year of more than 8%.

Gains by Kospi-listed stocks fuelled a 1% rise in MSCI’s emerging-stocks index, although the index remains on course to end August some 5.5% lower.

Korea’s optimism was being reflected in equity markets outside China, such as Taiwan, where equities gained 1.5%, said Stephen Innes, an AxiTrader market strategist.

“For me, Korea really dials into the overall sentiment of how investors are perceiving the region,” Innes said, adding that he was bullish on stocks but remained wary of the risk that weakening currencies would reduce returns.

Chinese blue-chips edged 0.3% higher. The Shanghai Composite dipped 0.2%.

China’s yuan weakened in offshore trading, heading for its biggest monthly decline since the country’s currency reform in 1994, amid trade tension with the United States and a domestic slowdown.

Moscow-listed stocks gained for a fourth straight day, rising 0.4%. The rouble rose 0.1% against the dollar.

Johannesburg-listed stocks gained 0.4%, with Woolworths rising 1.3%, enough to overcome weakness in some materials companies such as Gold Fields. The rand retreated before the release of local trade data and monthly budget balance figures, due at 1200 GMT.

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“With the rand still teetering not far off of its highest levels in almost a year, weak data could keep the rand on the defensive,” traders at ETM Analytics said in a note.

Focus will once again be on the Argentina later in the day. Standard & Poor’s slashed the country’s long-term credit rating on Thursday, cutting it three notches into the deepest area of junk debt. It said a government plan to unilaterally extend maturities had triggered a brief default.