World Economy

Emerging Stocks Set for 6th Week of Gains

Emerging Stocks Set for 6th Week of GainsEmerging Stocks Set for 6th Week of Gains

Emerging stocks pushed to a fresh near-decade high and were set for a sixth straight week of gains on Friday after Chinese growth data lifted Asian markets to a record peak and the yuan to a two-year high.

MSCI’s benchmark emerging stocks index rose 0.4%, on course to end the week more than 2% stronger. MSCI’s broadest index of Asian shares outside Japan climbed 0.6% to an all-time peak, Reuters reported.

Investor sentiment is being underpinned by improved corporate earnings and economic expansion in both developed and emerging markets, while oil prices have steadied at over $68 a barrel, helping crude exporters.

The rosy picture was cemented by data from China on Thursday that showed the world’s second-largest economy grew faster than expected in the fourth quarter, and achieved its first annual acceleration in growth in seven years.

The numbers gave an extra kick to Asian markets, with Hong Kong stocks up 0.4% to record highs, after surging 2.7% in the week. China mainland shares hit fresh two-year highs with a weekly gain of 1.7%. Heavyweight Taiwan rose 0.7%, up 2.5% for the week.

Meanwhile investors were left unfazed by US Treasury yields continuing their upward march to hit their highest levels since September 2014.

“The key ingredient for emerging markets is growth,” said Paul Fage, senior emerging markets strategist at TD Securities. “If you have the underlying growth story, markets can ride through Fed interest rate hikes—especially in an environment with dollar weakness.”

The dollar index was languishing near a three-year low over fears of a US government shutdown but emerging currencies delivered a mixed performance after some made strong gains in the week.

The yuan breached the psychologically important 6.4 dollar level for the first time in more than two years.

Meanwhile, the South African rand hit a fresh 2-1/2-year high in early trading before sliding back, but was still on course for a weekly gain of about 1.6%. South Africa’s central bank held rates at 6.75% on Thursday as expected, seeing upside inflation risks despite the recent strengthening of the rand.

The rand has gained more than 13% against the dollar since the bank’s Nov. 23 meeting, lifted largely by Cyril Ramaphosa’s election as leader of the ruling African National Congress in December.

Turkey’s lira also fell 0.2% and was on course for a weekly loss. Political risks were weighing on the lira, with Turkey and the United States at loggerheads over Washington’s plans for Syria.

Turkey’s central bank kept its late liquidity window rate on hold at 12.75% on Thursday, saying it would stick with its tight policy stance until inflation improves.

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