Emerging stocks touched two-week highs on Monday thanks to strong gains across Asia, a one percent oil price rise and a flat dollar, while Chinese mainland shares were boosted by encouraging comments from index provider MSCI.
MSCI's emerging markets benchmark rose 0.6 percent, lifted by Asia where Taiwan closed at 27-year highs and Hong Kong-listed Chinese shares rose 0.75 percent.
Chinese Shanghai- and Shenzen-listed shares were at 18-month highs after MSCI said it could add another 195 firms to its emerging markets index having this month given the green light to 222 stocks to join in a year's time.
On currency markets, the dollar remained pinned flat as markets have been pricing out another U.S. rate rise this year, given the run of soft economic data while the U.S. bond curve is at the flattest in a decade, with 10-year yields just off seven-month lows.
"People are still happy to buy EM assets and high yielders. We have well digested the Fed. Maybe there could be a question about inflation this week - we expect a decline in both Europe and the United States," said Guillaume Tresca, a strategist at Credit Agricole in Paris.
"We are trying to find a trigger for a sell off – such as bad inflation, the ECB, political risk - but all these factors are okay for now."
That backdrop has allowed emerging currencies to rally, with currencies ranging from the Korean won to the South African rand and the Turkish lira rising around 0.4 percent to the dollar . The rouble jumped 0.8 percent, rising off four-month lows hit during last week's oil price fall.
Gulf markets were shut for Eid but Qatari credit default swaps rose 4 basis points to the highest in a year after neighbouring states, which have imposed sanctions on the country, gave it 10 days to comply with an ultimatum.
Although world markets have remained sanguine, Morgan Stanley pointed out the possible fallout on oil prices.
"The Saudi Arabia-led group seems to have adopted an increasingly critical position against Iran which may soon lead to uncertainty about the size of regional energy exports should the conflict escalate further from here," the bank wrote.
Political risk may also flare in South Africa where investors are concerned about the threat to central bank independence.
"In the very short-term we are still positive on the rand, due to the carry. But we see a long-term depreciation due to the high political risk," Tresca said. "The central bank has always been a positive factor for ratings agencies and investors." For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://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
on year
Morgan Stanley Emrg Mkt Indx 1017.98 +6.31 +0.62 +18.06
Czech Rep 972.83 -7.85 -0.80 +5.56
Poland 2327.99 +23.51 +1.02 +19.51
Hungary 35782.71 +183.20 +0.51 +11.81
Romania 8270.37 -77.18 -0.92 +16.73
Greece 824.78 +4.26 +0.52 +28.14
Russia 999.36 +10.43 +1.05 -13.27
South Africa 45335.84 -22.82 -0.05 +3.27
Turkey 99638.65 -433.50 -0.43 +27.52
China 3186.05 +28.17 +0.89 +2.66
India 31138.21 -152.53 -0.49 +16.94
Currencies Latest Prev Local Local
close currency currency
% change % change
in 2017
Czech Rep 26.25 26.26 +0.04 +2.90
Poland 4.21 4.22 +0.27 +4.59
Hungary 309.24 309.45 +0.07 -0.14
Romania 4.57 4.57 -0.08 -0.74
Serbia 121.36 121.57 +0.17 +1.64
Russia 59.03 59.43 +0.68 +3.78
Kazakhstan 324.25 326.06 +0.56 +2.90
Ukraine 26.03 26.03 -0.02 +3.71
South Africa 12.86 12.92 +0.43 +6.76
Kenya 103.55 103.60 +0.05 -1.14
Israel 3.54 3.54 +0.07 +8.93
Turkey 3.50 3.51 +0.35 +0.90
China 6.84 6.83 -0.06 +1.52
India 64.43 64.48 +0.08 +5.45
Brazil 3.34 3.34 +0.01 -2.66
Mexico 17.93 18.00 +0.38 +15.54
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 330 -2 .03 7 88.33 1
All data taken from Reuters at 08:56 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT. (Additional reporting by Claire Milhench, editing by Ed Osmond)
(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}