5 Min Read
LONDON, May 15 (Reuters) - Emerging markets started the week on a high on Monday, with stocks at a two-year peak, the rouble, rand and lira up for a fourth straight session and hard currency bonds at their strongest since late-2014.
The rally came thanks to an oil-led charge in commodity markets, as well as weakness in the dollar after lacklustre economic data on Friday had cooled what had been growing expectations for a rapid-fire run of U.S. interest rate hikes.
Russia's rouble jumped almost one percent to under 56.5 per dollar as the Russian and Saudi energy ministers said oil production cuts would be extended, catapulting Brent and WTI prices higher.
Russian shares led the pack with a more than 1.2-percent rise after climbs across much of Asia had lifted MSCI's 23-country EM index to its highest since May 2015 and put it on track for a sixth day of gains for the first time since August.
"The news that there's been a consensus on extending the OPEC cuts has provided some support to oil prices and some of the oil currencies such as the rouble," said Capital Economics' senior emerging markets economist William Jackson.
"Maybe that has spread through to a more general improvement in sentiment towards emerging markets."
There was little impact, meanwhile, from weaker-than-expected Chinese data, where factory output and fixed asset investment growth cooled in April after a strong first quarter.
The yuan edged marginally lower, but shares in Shanghai ended up 0.4 percent, steadying after falling almost 6 percent since early April.
Elsewhere Pakistan shares hit their latest record high and South Korean stocks shrugged off a fresh missile test in North Korea to finish 0.2 percent higher and just below their all-time peak.
India's rupee also climbed 0.3 percent on news that consumer inflation eased in April to its lowest in at least five years.
The country's improving inflation performance has pushed real interest rates - the amount by which they exceed inflation - strongly into positive territory. That has attracted buyers to the bond market and driven stocks to double-digit percentage gains this year. Ten-year yields slipped to one-month low.
Morgan Stanley investment flow data published on Monday underscored the current fashion for emerging markets assets.
Dedicated EM funds that it tracks reported inflows of $2.32 billion over the last week, the eighth straight week of positive momentum, its figures showed.
That included a 15th straight week of inflows for EM bond funds. All EM countries reported equity inflows too with Greece, Colombia and Qatar seeing the largest moves relative to the funds' assets under management. 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
Morgan Stanley Emrg Mkt Indx 1008.35 +5.98 +0.60 +16.94
Czech Rep 1017.21 -0.75 -0.07 +10.37
Poland 2370.22 +1.72 +0.07 +21.68
Hungary 34323.72 -111.81 -0.32 +7.25
Romania 8426.48 +18.81 +0.22 +18.93
Greece 790.51 +1.38 +0.17 +22.82
Russia 1114.53 +14.78 +1.34 -3.28
South Africa 47446.50 +16.07 +0.03 +8.07
Turkey 95578.01 +581.66 +0.61 +22.32
China 3090.23 +6.72 +0.22 -0.43
India 30328.83 +140.68 +0.47 +13.90
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.50 26.56 +0.20 +1.90
Poland 4.21 4.21 +0.07 +4.63
Hungary 309.50 309.50 +0.00 -0.22
Romania 4.55 4.54 -0.05 -0.26
Serbia 123.06 123.10 +0.03 +0.24
Russia 56.49 57.04 +0.98 +8.45
Kazakhstan 312.85 315.86 +0.96 +6.65
Ukraine 26.43 26.46 +0.11 +2.16
South Africa 13.26 13.35 +0.70 +3.56
Kenya 103.15 103.10 -0.05 -0.76
Israel 3.60 3.60 -0.07 +6.94
Turkey 3.56 3.57 +0.26 -1.02
China 6.90 6.90 +0.01 +0.68
India 64.12 64.24 +0.19 +5.97
Brazil 3.12 3.12 -0.04 +4.20
Mexico 18.71 18.81 +0.52 +10.72
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 318 0 .02 7 81.77 1
Additional reporting by Claire Milhench in London; Editing by Andrew Heavens