Reuters
London

Emerging market stocks extended their rally into a sixth day yesterday, reaching seven-week highs, and currencies strengthened against the dollar on expectations US rate rises would be delayed into 2016.
Last Friday’s weaker-than-expected US jobs data has put off the prospect of a rate increase, helping emerging market assets to stabilise after selling off in August and September.
The benchmark emerging equity index was up 2.2%, with Hong Kong shares leading the gains, closing more than 3% higher. Stocks rallied more than 1% in Russia, Turkey and South Africa and
“What may have changed in the past two months is that while growth momentum across emerging markets is still negative, the pace of deterioration seems to be slowing,” said Maarten-Jan Bakkum, investment strategist for emerging market funds at NN Investments.
“It’s not super good news, but it’s good news all the same. It seems to be bottoming out.”
Investors pulled some $3.2bn from emerging market equity exchange-traded products in September, global data from asset manager BlackRock showed, and net outflows are at almost $30bn for the year to date. But BlackRock said outflows seemed to be abating.
“Q3 outflows for the category remain significant, and while it might be too early to call the bottom of the market for EM, it is an area to watch,” said Ursula Marchioni, chief strategist EMEA, at BlackRock iShares.
Morgan Stanley said it was time to increase equity exposure to emerging and commodity markets and trim European stocks.
“The real kicker should come from an improvement in news flow around China - on both economic growth and policymaking - which should drive a pick-up in sentiment more broadly across the emerging market space,” analysts wrote in a research note.
Some of the most beaten-down emerging market currencies rallied against the dollar. The Indonesian rupiah was on course for its best daily performance in seven years, up around 3.3% against the dollar, after gaining all week.
Central bank interventions have helped to put a floor under the currency, and a third round of stimulus measures will be announced on Wednesday, aimed at supporting consumption and reviving economic growth.
Malaysia’s ringgit was poised for its largest daily gain in two years, up more than 5% against the dollar at a five-week high.
Malaysia’s August exports were better than expected, up 4.1% year-on-year, thanks to rising shipments to Singapore, China and the US.
The ringgit was named by star Templeton bond investor Michael Hasenstab as one of the emerging market currencies he is buying. He also said valuations on some assets provided a “multi-decade” buying opportunity.
The Russian rouble strengthened 1.4%, matching a rise in Brent crude futures.