LONDON, May 26 (Reuters) - Emerging stocks hovered near 10-day highs on Thursday as oil price gains lifted markets in Russia and other oil producers, while hopes of a currency devaluation pushed Nigerian stocks to new 4-1/2 month highs.
Emerging assets have pushed higher this week helped by a strong performance on Wall Street and other developed markets, while oil prices have risen back above $50 a barrel for the first time in nearly seven months.
Higher oil boosted crude producers, with Russian dollar-denominated stocks up around one percent, and gains across Middle Eastern bourses.
The rouble firmed 0.2 percent and neighbouring oil producer Kazakhstan’s tenge strengthened almost one percent against the dollar.
Russia sold $1.75 billion in 10-year eurobonds on Tuesday, although the issue was hampered by liquidity concerns.
One market participant said the bond was trading at around 100.9375-101.125 on Thursday in “good volumes”, after rising more than one percentage point on Wednesday to close at 100.90.
“It’s not a bad moment for oil credits and under normal conditions this bond would have flown off the shelves especially as they came in with a very decent premium,” said Luis Costa, EM strategist at Citi.
“Eventually if this bond becomes euro-clearable it will become an easier instrument for Western banks to trade and that will bring more demand.”
The benchmark emerging equity index was up 0.3 percent on Thursday, after surging 1.5 percent on Wednesday, its biggest one-day gain since April 13.
Emerging Europe opened strongly, with Polish stocks up around one percent to nine-day highs. Turkey bucked the trend however, with stocks slipping 1.2 percent and the lira weakening 0.2 percent against the dollar.
Both had gained this week following Prime Minister Binali Yildirim unveiled his new cabinet, confirming key members of the economic team, including reformer Deputy Prime Minister Mehmet Simsek.
However, whilst Simsek will continue to oversee the Treasury and Central Bank, his portfolio has shrunk, with regulation of banks and capital markets handed to a minister close to President Tayyip Erdogan.
“It seems that Simsek’s portfolio is a bit reduced compared to what people had in mind before, which could explain some of the correction,” said Sebastien Barbe, head of EM FX at Credit Agricole.
The market is now awaiting a speech from U.S. Federal Reserve chair Janet Yellen on Friday to see if she will deliver a more hawkish line consistent with recent comments from other Fed policymakers, which seemed to put a possible summer rate hike back on the table.
Nigerian stocks extended gains, up 0.6 percent and adding to Wednesday’s 3.8 percent rise to touch their highest since January, while bonds rose on hopes of an end to the gridlock.
Nigerian dollar/naira forwards were trading a little below record highs hit on Wednesday, but remained elevated after the central bank signalled a shift to a flexible regime, abandoning the naira peg.
One-month non-deliverable forwards (NDFs) showed the naira trading at 264 naira per dollar, after hitting 276 naira per dollar on Wednesday.
JPMorgan said a dual-exchange rate regime, which authorities are expected to introduce, would not be a positive step.
“The degree of flexibility and level around which the interbank will be allowed to fluctuate will be critical in determining financial inflows,” the bank told clients, adding that the uncertainty would keep “substantial” pressure on the naira.
For GRAPHIC on emerging market FX performance 2016, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2016, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2016, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2016, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg
Morgan Stanley Emrg Mkt Indx 802.30 +2.62 +0.33 +1.03
Czech Rep 886.32 -3.96 -0.44 -7.32
Poland 1849.27 +18.12 +0.99 -0.53
Hungary 26756.36 +51.89 +0.19 +11.85
Romania 6423.75 +14.36 +0.22 -8.29
Greece 641.01 -0.79 -0.12 +1.53
Russia 918.21 +10.24 +1.13 +21.29
South Africa 48190.12 +462.86 +0.97 +5.22
Turkey 77767.90 -841.16 -1.07 +8.42
China 2822.57 +7.49 +0.27 -20.25
India 26176.51 +295.34 +1.14 +0.23
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.02 27.01 -0.03 -0.08
Poland 4.41 4.40 -0.03 -3.34
Hungary 313.87 314.08 +0.07 +0.25
Romania 4.50 4.50 -0.04 +0.34
Serbia 123.11 123.07 -0.03 -1.33
Russia 65.27 65.41 +0.22 +11.77
Kazakhstan 333.40 336.06 +0.80 +2.13
Ukraine 25.09 25.06 -0.12 -4.54
South Africa 15.63 15.67 +0.25 -1.08
Kenya 100.60 100.80 +0.20 +1.59
Israel 3.84 3.84 +0.11 +1.31
Turkey 2.94 2.94 -0.11 -0.76
China 6.56 6.55 -0.07 -1.01
India 67.20 67.26 +0.10 -1.48
Brazil 3.58 3.58 +0.07 +10.57
Mexico 18.43 18.48 +0.25 -6.84
Debt Index Strip Spd Chg %Rtn Index
Sov‘gn Debt EMBIG 417 1 .00 7 16.53 1
Additional reporting by Kira Zavyalova in Moscow; Editing by Jon Boyle