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EMERGING MARKETS-Emerging stocks rise as China GDP, potential Fed move digested
March 6, 2017 / 11:02 AM / 9 months ago

EMERGING MARKETS-Emerging stocks rise as China GDP, potential Fed move digested

LONDON, March 6 (Reuters) - Emerging stocks rose half a percent on Monday, rebounding after two lossmaking sessions as investors absorbed the likelihood of slower China growth and a March interest rate rise in the United States.

Bourses in Asia and Russia chalked up solid gains while Turkey’s stock index roared 1.4 percent higher to a two-year high, led by shares of exporters that benefit from currency weakness.

Mainland China stocks closed 0.5 percent up thanks to a jump in tech shares after Premier Li Keqiang identified innovation as key to overhauling the economy at the opening of the annual meeting of the country’s parliament.

However, officials also cut the economic growth target for the world’s number two economy to around 6.5 percent for 2017 from a range of 6.5-7 percent in 2016.

A steady dollar not far off seven-week highs weighed on currencies as investors also prepared for a possible U.S. Federal Reserve interest rate rise later in March making it more costly for developing governments and companies to borrow.

“There was a bit of an upside for U.S. yields last week, but maybe the rate hike has been front-loaded,” said Sebastian Barbe, emerging markets strategist at Credit Agricole.

“Most of the Fed officials are still pointing to the fact that the rate hike process will be very much a step by step process – so it is not the end of the world for emerging markets, and it is mostly priced in.”

Markets are pricing in about a 90 percent chance the Fed will raise interest rates by 0.25 percentage point at its meeting on March 14-15, with another rate hike fully priced in by September.

Oil exporter Russia saw the rouble shrug off the crude price fall to strengthen 0.4 percent while copper producer South Africa saw the rand match those gains.

But Turkey’s lira weakened 0.3 percent amid mounting disagreement between Ankara and Berlin over Turkey’s effort to campaign among its German diaspora to back a vote to enhance President Tayyip Erdogan’s powers.

“There are rising tensions with Germany, and that is adding to some uncertainty that has grown over the last two months, which means foreign investors have become more reluctant to buy Turkish assets,” Barbe added.

Ukraine’s eurobonds gained across most of the curve following five days of falls for most issues after the International Monetary Fund said it had an agreement with Kiev on an updated memorandum under a $17.5 billion programme.

That paves the way for the fund to consider disbursing the fourth loan tranche later in March.

Shares in Aberdeen Asset Management, an emerging market focused money manager, rose 4.5 percent after news that Standard Life had agreed an 11 billion-pound merger.

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

on year

Morgan Stanley Emrg Mkt Indx 935.83 +4.76 +0.51 +8.53

Czech Rep 976.07 +1.84 +0.19 +5.91

Poland 2232.55 -0.43 -0.02 +14.61

Hungary 33036.39 -157.42 -0.47 +3.23

Romania 7916.59 -62.38 -0.78 +11.74

Greece 647.01 -2.72 -0.42 +0.52

Russia 1119.38 +11.12 +1.00 -2.86

South Africa 44532.13 -104.17 -0.23 +1.44

Turkey 91018.02 +1295.97 +1.44 +16.48

China 3234.40 +16.09 +0.50 +4.21

India 29048.19 +215.74 +0.75 +9.10

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 27.02 27.00 -0.05 -0.03

Poland 4.31 4.30 -0.16 +2.22

Hungary 309.51 308.85 -0.21 -0.22

Romania 4.53 4.53 -0.03 +0.09

Serbia 123.55 123.60 +0.04 -0.16

Russia 58.10 58.24 +0.24 +5.45

Kazakhstan 315.04 317.65 +0.83 +5.91

Ukraine 26.96 27.09 +0.48 +0.15

South Africa 12.98 13.01 +0.25 +5.81

Kenya 102.55 102.50 -0.05 -0.18

Israel 3.69 3.70 +0.17 +4.38

Turkey 3.71 3.70 -0.29 -5.00

China 6.90 6.90 +0.00 +0.69

India 66.70 66.75 +0.07 +1.87

Brazil 3.11 3.11 +0.00 +4.46

Mexico 19.51 19.50 -0.03 +6.19

Debt Index Strip Spd Chg %Rtn Index

Sov‘gn Debt EMBIG 326 1 .04 7 64.04 1

All data taken from Reuters at 10:24 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

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) (Additional reporting by Claire Milhench; Editing by Richard Lough)

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