🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

EMERGING MARKETS-Stocks approach record highs, EMEA FX retreats

Published 2021/01/08, 11:36
Updated 2021/01/08, 11:42
© Reuters.
USD/ZAR
-
USD/TRY
-
US500
-
IMOEX
-
WIG20
-
XU100
-
JTOPI
-
BUX
-

* Turkish, Russian and South African stocks at record high

* South Africa's rand underperforms peers this week

* EM stocks have outperformed U.S. peers since late last-year

By Ambar Warrick

Jan 8 (Reuters) - Emerging market stocks neared a record high on Friday as hopes of economic recovery and loose monetary policy lifted sentiment, while most currencies in Europe, the Middle East and Africa fell against a recovering dollar.

The MSCI's index of emerging market (EM) stocks rose 1.4% to a 13-year peak, trading a few points shy of a record high, with Turkish .XU100 , Russian .IMOEX and South African .JTOPI bourses hitting record peaks.

Progress in coronavirus vaccines has helped MSCI's EM index rally 24% since October, well above U.S. equities, with the prospect of favourable U.S. trade policies under a new administration and record-low interest rates also lending support.

In comparison, the S&P 500 benchmark .SPX is up about 13% over the same period.

The Democrats' taking of the U.S. Senate this week also spurred capital flows into assets outside the United States, as the possibility of increased fiscal spending and corporate taxes took some sheen off U.S. risk assets.

"Investors are getting more comfortable wading further out into risk-on waters, considering that the spillover from last year's downside risks has subsided, including Brexit concerns and the U.S. election cycle," Han Tan, market analyst at FXTM wrote in a note.

"Now, investors are gravitating towards the increased likelihood of more incoming U.S. fiscal stimulus in light of the Democrats' sweep of the Georgia Senate runoffs."

But foreign exchange markets, particularly those in Europe, the Middle East and Africa remained sensitive to coronavirus-related ructions, as well as some mild dollar strength. USD/

Turkey's lira TRY= dropped 1.1% from a 4-1/2 month high as the central bank's net international reserves fell to their lowest in nearly two decades. central bank bled out its reserves last year to protect the lira from pandemic-led disruptions, although the currency began to recover after the bank embarked on a steep rate-hiking spree towards the end of 2020.

South Africa's rand ZAR= edged up to the dollar after plunging 2.5% in the prior session, even as spiking coronavirus cases and concerns over local debt continued to weigh on sentiment.

The currency was set to largely underperform its peers for the week with a 5.2% loss, its worst week since April 2020.

But news that the country had secured some doses of coronavirus vaccines gave investors some comfort. European currencies retreated to the euro, while Polish .WIG20 and Hungarian .BUX equities hit a more than 10-month high.

For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

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

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ EM Stocks outpace U.S. peers

https://tmsnrt.rs/2Xoj0fD

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.