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EMERGING MARKETS-Trump tax hopes, China data lift emerging stocks, currencies
February 10, 2017 / 11:07 AM / 10 months ago

EMERGING MARKETS-Trump tax hopes, China data lift emerging stocks, currencies

LONDON, Feb 10 (Reuters) - Forecast-beating Chinese trade data and impending U.S. tax cuts from President Donald Trump lifted emerging stocks to a new five-month high on Friday while currencies were set to finish the week on a strong note.

MSCI’s emerging market index rose 0.3 percent, with stocks having added 1 percent this week in their third straight week of gains, after numbers from China showed a strong pick-up in demand at home and abroad, marking a healthy start to 2017 for the world’s largest trading nation.

A White House statement on Thursday, which said that Trump planned soon to announce the most ambitious tax reform plan since the Reagan era, raised investors’ hopes for a cut in corporate tax rates, sending stock markets around the globe higher.

The gains filtered widely through emerging markets. Bourses in China , South Korea and Malaysia were up around half a percent, while Taiwan, South Africa, Poland and Czech Republic all jumped nearly 1 percent.

“The Chinese data does indeed suggest that global growth is on a good footing,” said Jakob Christensen at Danske Bank.

“The combination of good Chinese growth numbers and the signals by Trump that he may embark on a tax easing which would stimulate growth in the U.S., is giving a tailwind to emerging market currencies.”

Rising oil prices boosted Russia’s rouble 0.5 percent against the dollar for a second week of gains.

South Africa’s rand also rose 0.5 percent, shrugging off President Jacob Zuma’s annual address on Thursday. The event raised issues of wealth distribution, but descended into chaos and brawling. The rand, however, was on track for a small weekly loss.

The Turkish lira too firmed slightly and was headed for a second straight week of gains, benefiting from a weighted average central bank funding rate of around 10.38 percent .

The Mexican peso, on track for its third week of gains, strengthened 0.2 percent after the central bank raised its benchmark interest rate to a nearly eight-year high to curb rising inflation and currency weakness caused by Trump’s trade threats.

Central and eastern European currencies came under some pressure against the euro. Czech data showed inflation accelerating in January while minutes from the last central bank meeting showed a majority of board members saw a likely end to the capping of the crown in mid-2017.

“Inflation has risen sharply since September,” Capital Economics’ Liam Carson told clients, adding that the latest increase had reinforced the view the cap would go in the coming months.

“We see the monetary policy committee meeting on 4th May as the most likely date for the policy shift.”

For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5

Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley Emrg Mkt Indx 928.16 +2.59 +0.28 +7.64

Czech Rep 963.52 +10.06 +1.06 +4.55

Poland 2152.05 +19.65 +0.92 +10.48

Hungary 33128.67 +179.59 +0.55 +3.52

Romania 7667.51 +40.07 +0.53 +8.22

Greece 624.37 +15.58 +2.56 -2.99

Russia 1160.71 -2.48 -0.21 +0.73

South Africa 45386.96 +373.71 +0.83 +3.38

Turkey 88921.05 +90.84 +0.10 +13.80

China 3197.33 +14.15 +0.44 +3.02

India 28334.25 +4.55 +0.02 +6.41

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 27.02 27.02 +0.00 -0.03

Poland 4.30 4.31 +0.18 +2.36

Hungary 308.08 307.91 -0.06 +0.24

Romania 4.50 4.49 -0.07 +0.85

Serbia 123.89 123.87 -0.02 -0.44

Russia 58.68 58.94 +0.43 +4.39

Kazakhstan 322.70 323.60 +0.28 +3.39

Ukraine 27.20 27.04 -0.61 -0.74

South Africa 13.35 13.39 +0.32 +2.88

Kenya 103.45 103.40 -0.05 -1.04

Israel 3.74 3.74 +0.02 +2.87

Turkey 3.67 3.68 +0.24 -3.99

China 6.88 6.87 -0.19 +0.93

India 66.82 66.74 -0.12 +1.68

Brazil 3.13 3.13 +0.00 +3.94

Mexico 20.30 20.34 +0.24 +2.06

Debt Index Strip Spd Chg %Rtn Index

Sov‘gn Debt EMBIG 338 -1 .04 7 58.91 1

All data taken from Reuters at 10:16 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see ) (Additional reporting by Claire Milhench; Editing by Toby Davis)

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