| LONDON, April 25
LONDON, April 25 Emerging market equities rose
towards their highest in nearly two years on Tuesday, as relief
over the results of Sunday's election in France boosted appetite
for riskier assets and U.S. President Donald Trump's tax reform
promises leant support.
MSCI's benchmark emerging equities index has
rallied hard since market favourite Emmanuel Macron went safely
through the first round of voting in France to face far-right
leader Marine Le Pen in a May 7 run-off for the presidency.
Emerging market stocks rose almost 1 percent, extending
similar gains from the previous session to touch their highest
level since June 2015.
"We have at least a week of upside to look forward to
because we have just seen an easing of European political risk,"
said Koon Chow, emerging markets macro and FX strategist at UBP.
"Europe is important for EM because it is a place where it sells
its goods to and also where it gets a lot of investment from."
Asian manufacturing markets set the trend with index
heavyweights such as Hong Kong and Taiwan up 1.2
percent. Korean stocks gained over 1 percent to touch a
near six-year high, and the Korean won rose 0.7 percent.
Trump has called for new UN sanctions against North Korea
, which has conducted a big live-fire exercise to
mark the foundation of its military.
Parts of emerging Europe also continued to perform well as
the risk of an anti-European Union French president receded.
Poland, one of the biggest net receivers of EU funds,
rose 0.5 percent to the highest since July 2015.
The Polish zloty gained 0.2 percent against the
euro after touching two-week highs on Monday.
Trump's promise to offer a "big tax reform and tax
reduction" plan on Wednesday also lifted investor sentiment. So
did his indication that he is willing to delay pushing for funds
to build a border wall with Mexico .
Chow said that the risk of U.S. protectionism and other
forces of political friction had eased, helping some emerging
market currencies appreciate against the dollar.
The yield premium paid by emerging market sovereign bonds
over U.S. Treasuries on the JPMorgan EMBI Global Diversified
narrowed 1 basis point to 306 basis points (bps), the
lowest level since April 7. It has narrowed 14 bps since April
Currencies retreated a touch after pushing to multi-week
highs on Monday.
The South African rand slipped 0.5 percent against
the dollar, after rising to a three-week high in the previous
session. The central bank's leading business cycle indicator was
up 1.1 percent month-on-month in February.
The Turkish lira also slipped 0.5 percent from a
two-month high on Monday. Turkey's central bank governor said it
would maintain its tight monetary policy stance, before its
rate-setting meeting on Wednesday.
The Hungarian forint weakened 0.2 percent against the euro
. Hungary's central bank meets later on Tuesday, and is
expected to keep rates on hold and maintain a loose monetary
For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5
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
Emrg Mkt Indx 979.86 +8.50 +0.88 +13.64
Czech Rep 993.65 +1.13 +0.11 +7.82
Poland 2310.62 +13.72 +0.60 +18.62
Hungary 33113.11 -113.35 -0.34 +3.47
Romania 8273.99 -22.76 -0.27 +16.78
Greece 687.26 +3.96 +0.58 +6.78
Russia 1114.33 -2.25 -0.20 -3.30
South Africa 46346.58 +158.65 +0.34 +5.57
Turkey 93715.39 -87.42 -0.09 +19.93
China 3135.40 +5.87 +0.19 +1.02
India 29845.35 +189.51 +0.64 +12.09
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.80 26.82 +0.04 +0.76
Poland 4.24 4.24 +0.17 +3.97
Hungary 311.67 311.19 -0.15 -0.91
Romania 4.52 4.53 +0.10 +0.27
Serbia 123.28 123.27 -0.01 +0.06
Russia 55.92 55.75 -0.30 +9.56
Kazakhstan 312.06 311.66 -0.13 +6.92
Ukraine 26.62 26.62 +0.00 +1.43
South Africa 13.07 13.00 -0.50 +5.10
Kenya 103.15 103.18 +0.03 -0.76
Israel 3.65 3.65 -0.04 +5.54
Turkey 3.59 3.57 -0.41 -1.64
China 6.89 6.88 -0.02 +0.83
India 64.24 64.49 +0.38 +5.76
Brazil 3.13 3.13 -0.04 +4.00
Mexico 18.77 18.73 -0.21 +10.35
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 324 -2 .02 7 78.83 1
(Additional reporting by Marc Jones, editing by Larry King)