Reuters
London


A rally in Chinese mainland equities helped emerging stocks snap a six-day losing streak yesterday, and some beaten-down currencies such as the Turkish lira climbed off record lows but others remained in the doldrums after a raft of weak data.
MSCI’s broadest emerging market index was up 1.3% following a surge in Chinese mainland equities after August trade data showed a 13.8% fall in imports and a 5.5% fall in exports.
Simon Quijano-Evans, chief emerging markets strategist at Commerzbank, said there may have been some buying by Chinese state institutions to help stabilise the markets. “You don’t need very much in this sort of market to drive things up as liquidity is so low,” he said.
Chinese shares initially fell after the data release, but the CSI300 index, which lists the biggest stocks in Shanghai and Shenzhen, closed up 2.6%, while the Shanghai Composite Index rose 2.9%. Quijano-Evans also pointed to new tax incentives to encourage investors to hold stocks longer. “That’s driving sentiment elsewhere, but fundamentally the trade data would indicate that the macro story in China remains weak.”
The South Korean won ended local trade up 0.2% but earlier touched a five-year low on expectations that dollar demand would rise following Tesco’s sale of its largest overseas unit, Homeplus, in South Korea.
The won’s loss was capped with traders suspecting intervention by foreign exchange authorities.
Other Asian currencies remained under pressure. The Malaysian ringgit plumbed a pre-peg 17-year low, while the Indonesian rupiah also hit its weakest since 1998.
But the Turkish lira edged up 0.27% against the dollar after positive comments from the new deputy prime minister. This offset lacklustre July industrial production numbers.
“Overall, the data reinforce our view that GDP growth is likely to slow over the coming quarters,” William Jackson, senior emerging markets economist at Capital Economics, said in a note.
Hungary also reported weaker than expected industrial output for July, with flat consumer inflation. The forint slipped marginally against the euro and stocks dipped 0.84%.
The Czech Republic remained one of the few bright spots in emerging markets with job vacancies at their highest since 2008 as the economy strengthens. Ashmore Group, an emerging markets specialist manager, reported a rise in profit although assets under management slid to $58.9bn at the end of June, from $75bn a year ago.