Emerging Market Stocks Surge Amid China Stimulus Speculation
(Bloomberg) -- Emerging market stocks gained as investors assessed the possibility of fresh stimulus measures for China's economy.
MSCI's index for developing-nation equities advanced 0.7% to its highest level in a week on a closing basis by 10 a.m. in Johannesburg. Its currency equivalent rose for a fourth day, climbing 0.2%.
“China is facing many structural issues, weak private demand, demographic issues, deflation etc. In many respects I am reminded of the early 90s Japan market,” said Abdul Kadir Hussain, managing director of fixed income at Arqaam Capital.
Such measures may provide short term respite, but until some of the structural issues are resolved, it remains a difficult case over the medium term, he said.
The effect of China on all riskier assets was tempered though, with EM high yields bonds having returned almost 11% over the past three months said Hussain.
Policymakers are seeking to mobilize about 2 trillion yuan ($279 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link, said people familiar with the matter, asking not to be identified discussing a private matter.
Meanwhile a gauge of dollar strength fell a second day aiding a rebound in the rand, which is experiencing its worst start to a year since 2016. South Korea's won strengthened after Bloomberg's report on China's rescue package.
In Europe, EU leaders are ready to play hardball with Hungary if Prime Minister Viktor Orban should continue to block a €50 billion ($54.5 billion) support package for Ukraine at an extraordinary summit next week, people familiar with the preparations said.
The forint traded at the weaker end of recent ranges on the news.
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©2024 Bloomberg L.P.
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