By Claire Milhench
LONDON, Sept 19 (Reuters) - Emerging stocks rose for a second day on Wednesday as investors bet on further stimulus from Beijing to cushion the impact of another round of trade tariffs, while the beaten-down rand and Turkish lira firmed.
The protracted trade dispute between China and the United States ratcheted up again this week as China levied tariffs on about $60 billion worth of U.S. goods in retaliation for the latest round of U.S. tariffs on Chinese products. benchmark emerging stocks index .MSCIEF rose 0.8 percent, building on Tuesday's 0.3 percent gain, on hopes China will unleash more stimulus to try to limit the economic damage from U.S. tariffs.
"The tariffs were expected and August was a very negative month for emerging markets, so investors had adjusted their positions to be quite defensive," said Koon Chow, an emerging markets strategist at UBP.
"These investors have used the announcements as an opportunity to buy back some markets they felt had been unfairly punished."
Chinese mainland shares .CSI300 rose 1.3 percent to two-week highs and Hong Kong stocks .HSI gained 1.2 percent. The yuan CNY= also edged up after China pledged not to engage in competitive currency devaluation. the dollar index .DXY easing 0.3 percent to around six-week lows, emerging currencies were mainly firmer, with South Africa's rand ZAR=D3 up 1.1 percent.
South Africa's consumer inflation slowed to 4.9 percent year-on-year in August and the central bank is expected to leave rates unchanged at its meeting on Thursday. Maarten-Jan Bakkum, a senior strategist at NN Investment Partners, said he would not be surprised if the bank did raise rates.
"There have been some rumours they might hike - they have not really flagged that themselves but we know from the past that they can surprise. They are not scared to do that if they feel it is necessary," he said.
Even the Turkish lira TRY= , which has underperformed in recent days, firmed 0.7 percent as investors awaited the government's medium term plan, due out on Thursday.
Chow said he wanted to see the government working on the assumption of persistent high inflation and low growth over the next few years, and making some contingency plans for potential defaults.
"I wouldn't like to see a repeat of the previous plans – chiefly, expectations of previous fast growth and very strong capex," he added.
In emerging Europe, Hungary's forint firmed 0.1 percent against the euro EURHUF= , testing four-week highs after the central bank tweaked its policy tools on Tuesday, saying it was preparing for a future "gradual and cautious" normalisation of its loose monetary policy. a GRAPHIC on FX performance 2018, see: http://tmsnrt.rs/2egbfVh
For TOP NEWS across emerging markets CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB )
Emerging Markets Prices from Reuters
Net Chg % Chg % Chg
Morgan Stanley (NYSE: MS )
Emrg Mkt Indx .MSCIEF 1027.43
+7.69 +0.75 -11.31
+2.45 +0.22 +1.48
-8.40 -0.38 -9.69
35969.76 -141.13 -0.39 -8.65
8307.81 +20.83 +0.25 +7.15
+5.21 +0.76 -13.77
1133.89 +10.86 +0.97 -1.78
.JTOPI 49987.54 -232.23 -0.46 -4.85
.XU100 95705.18 +818.31 +0.86 -17.02
2730.85 +30.90 +1.14 -17.43
.BSESN 37330.71 +40.04 +0.11 +9.61
close currency currency
% change % change
67.29 +0.55 -13.84
South Africa ZAR=
14.90 +1.33 -15.95
6.37 +1.21 -39.78
72.70 +0.07 -12.14
4.16 +0.00 -20.37
Index Strip Spd Chg %Rtn Index
Sov'gn Debt 11EML EMBIG 379
.05 7 68.16 1
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