Emerging-market stocks and currencies headed for a fourth consecutive week of gains as investors weighed US rate cut prospects amid fresh efforts by developing nations to shore up their economies from China to Turkey.
MSCI Inc.’s benchmark for EM equities was little changed as of 9:55 a.m. in London, poised for a 2.5% advance this week. The currencies equivalent slipped 0.2% on the day, still well on track for a gain over the past five days.
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China announced its most forceful attempt yet to shore up the beleaguered property market, easing mortgage rules and encouraging local governments to buy unsold homes from developers for conversion into affordable housing. The Shanghai Stock Exchange Property Index surged following the statement.
Turkey’s lira was also set to extend its gain against the dollar to a fourth week, the longest winning streak since 2021 as pledges of monetary orthodoxy and lower inflation started resonating with investors. Turkish banking stocks headed for a record high.
EM Fundamentals
Those domestic factors added to the general risk-on mode this week, though global markets became more mixed by Friday. There was lingering concern the Fed will keep borrowing costs higher for longer as they await more evidence inflation is easing.
“When we cut EM risk a few weeks ago, we had pointed out that higher US rates and a stronger dollar are a toxic mix for EM local,” Luis Costa, global head of EM sovereign debt strategy at Citigroup, said in an email. “Since then, the combination of FOMC speeches and the weaker growth data out of the US have led to US rates being more contained, as well as to a weaker dollar. This suggests that EM local can do better again.”
Emerging-market fundamentals are in “reasonably good shape” overall, Citi’s Costa said.
South Africa’s rand headed for a 1.2% advance this week against the dollar. South Africa likely achieved a primary budget surplus for the first time in 15 years, setting it on a path to arrest further growth in debt, just ahead of elections this month.
This article was generated from an automated news agency feed without modifications to text.
