EMERGING MARKETS-Stocks rise on Chinese liquidity hopes, FX inches up
* Chinese stocks jump more than 1%, second quarter GDP falls short of expectations
* The South African rand extends its recovery to the second day
* Russian ruble under pressure from weak oil
July 15 (Reuters) – Emerging market equities surged on Thursday as mixed Chinese growth data raised expectations for more liquidity measures in the country, while currencies edged up on the President’s accommodative signals from the US Federal Reserve, Jerome Powell.
The MSCI Emerging Markets Equity Index rose 0.9% to 1,350.73 points, its highest level in nine days.
Chinese stocks, which make up the bulk of the emerging markets index, jumped more than 1% as investors anticipated further liquidity measures from the People’s Bank of China (PBOC), after economic growth in the second quarter grew more slowly than expected.
China’s biggest tech companies Alibaba and Tencent rose about 2.8% and 1.7% respectively.
The PBOC reduced bank reserve requirements last week to free up about 1,000 billion yuan ($ 154.64 billion) in cash. But the move has been interpreted as accommodating by some, on the grounds that it indicated some slowdown in a post-pandemic economic rebound.
Mitul Kotecha, chief emerging markets strategist for Asia and Europe at TD Securities, said the cut in the reserve rate was a “targeted attempt to keep liquidity stable rather than a step towards easing the market. Politics”.
“We expect manufacturing activity to moderate further in the coming months as trade slows, but services should catch up, especially retail spending, helping to mitigate the likely slowdown in activity. . “
The Chinese yuan rose 0.1%.
The Russian ruble fell 0.3% and was among the worst performers in the Europe, Middle East and Africa (EMEA) region as oil prices fell on reports that major OPEC producers had agreed to increase the offer.
The MSCI Emerging Market Currency Index edged up 0.2% as Powell’s comments on Wednesday reassured investors that the Fed would keep its policy loose for now, to support economic growth.
The prospect of low US interest rates benefits high yielding emerging market assets.
But gains have been held back by increasing cases of the virus in Asia.
The South African rand rose 0.4%, topping its EMEA peers as it extended a rally in a second straight session. Fears of escalating violence in the country had brought the rand back to its lowest level in three months.
In central Europe, the Polish zloty fell 0.4% against the euro, as the dispute between the country and the European Union over local judicial reforms escalated.
The zloty has also lagged behind its peers, the Hungarian forint and the Czech crown, in recent sessions as central banks of the other two currencies have started to tighten policy.
For TOP NEWS in emerging markets
For the CENTRAL EUROPE market report, see
For the TURKISH market report, see
For the report on the RUSSIAN market, see
Reporting by Ambar Warrick; Editing by Shailesh Kuber