China stimulus drives third day of emerging-market gains

A man leaves the Shanghai stock exchange as Hong Kong and Shanghai launched their stock-linked index, November 17, 2014. — Reuters pic
A man leaves the Shanghai stock exchange as Hong Kong and Shanghai launched their stock-linked index, November 17, 2014. — Reuters pic

BEIJING, Nov 1 — Emerging-market stocks rose for a third day today, as Beijing’s plan to boost infrastructure spending and a tepid dollar helped the mood after a bruising month for globally.

The MSCI index of developing- rose 0.8 per cent and was on track for a one-week high, as stocks rose on the latest in a round of official measures to support the domestic markets.

Onshore, ’s yuan strengthened past 6.95 per dollar. A Reuters poll of analysts showed Chinese authorities will defend the yuan from weakening past 7 per dollar, although some expected the currency to breach that level.

“Yesterday’s headlines out of the Politburo in China suggesting that more stimulus may be on the way is perhaps helping sentiment overnight,” Deutsche Bank strategist Jim Reid said in a note.

The MSCI EM index ended October with its worst monthly loss in more than three years, battered by worries about the impact on of Donald Trump’s trade war with China and rising US interest rates.

Surveys again suggested Chinese manufacturing barely expanded last month, while an extended contraction in export orders highlighted rising pressure on the economy as the trade war intensified.

The lira edged lower after data showed Turkey’s manufacturing activity contracted for the seventh consecutive month in October as output and new orders continued to slow.

The lira took a beating on Wednesday after the government unexpectedly announced a plan to cut taxes on several sectors, including cars, white goods and furniture, until the end of the year, hours after the central bank sharply raised forecasts for this year and next.

“The weakening of the currency does very well reflect the situation. The rally of the past few days and weeks remains quite unjustified by how bad the situation remains in Turkey,” said Cristian Maggio, head of emerging markets strategy at TD Securities.

A weaker dollar helped the Russian rouble, which rose 0.4 per cent, despite lower oil prices, and the South African rand, which jumped 1.6 per cent.

The British pound jumped 1.2 per cent on a report that Britain has secured a deal that would give its financial services firms continued access to after Brexit.

The Czech crown was little changed against the euro before an interest rate decision at 1200 GMT. The central bank is expected to raise rates by 25 basis points to 1.75 per cent.

Despite a robust economy, past have failed to boost the crown, which is down 1.5 per cent against the euro this year. A recent poll by Reuters forecast the crown would gain 3.5 per cent in the next 12 months, as central banks move towards tighter monetary policy.

Warsaw and Budapest stock exchanges were closed for All Saints’ Day holiday. — Reuters

Source: The Malay Mail Online

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