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Emerging market shares snapped a four-day losing streak on Friday as China’s soaring stock market pushed higher again to cap a stellar near-eight per cent rise in its best week of the year.
Though a more subdued run for other countries meant MSCI’s main emerging market index was fractionally lower on the week, China’s latest gains took its surge since March to an astounding 45 per cent.
In contrast, eastern Europe’s bourses were on course for their biggest weekly fall since March with Russia and Poland’s markets suffering struggles, the latter on growing uncertainty over the country’s political landscape.
The region’s bond markets however continued to rebound, with yields lower almost across the board, as they recovered having been hit for the last four weeks by a sell-off in western European debt markets.
“There was some excitement in emerging Europe following the move in (German) Bunds but now we are seeing a retracement and everything is behaving a little bit better,’’ said Viktor Szabo, an EM portfolio manager at Aberdeen Asset Management.
The zloty underlined Poland’s jitters ahead of the second round of presidential elections on Sunday. If President Bronislaw Komorowski is defeated, voters may also choose a less business-friendly government in Autumn national elections.
The currency was headed for its biggest weekly fall against the euro of the year and almost two years against the dollar. Warsaw’s stock market also underperformed the rest of the region for a second day, though for the week it was a shade higher.
“Poland is the strongest macro story in the region, good growth and sensible policies, and there is a risk that this (elections) could change things,’’ added Szabo.
Political interest was also rising ahead of Turkey’s elections next month, while Brazil’s real remained bruised by weak economic data and uncertainty about the government’s finances.
Elsewhere, the South African rand strengthened after Thursday’s signal from the country’s central bank that it could raise interest rates in the coming months to try and get control of rising inflation.
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