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Emerging market assets started the new quarter on an upbeat note on Thursday with stocks extending gains to hit the highest level in more than a week and currencies reaching multi-day highs following steep falls over the past three months.
MSCI’s broadest emerging market index gained 0.8 per cent, with the Asia ex-Japan benchmark adding more than 1 per cent and bourses elsewhere also trending higher.
In China, a slight upward revision to still-negative preliminary manufacturing numbers gave some investors hope that the world’s second largest economy was stabilising.
“The market has simply become too negative, particularly on China,’’ said Thomas Harr, head of EM research at Danske Bank.
“We are quite deep into the negative emerging markets cycle ... some of the sell-off we saw in late August and early September was extremely vicious.’’
Emerging stocks had dropped 20 per cent and currencies hit lows over the past quarter as tumbling commodity prices and concerns over China took their toll.
Yet on Thursday, major emerging currencies gained against the dollar, with South Africa’s rand strengthening 0.5 per cent and Turkey’s lira 0.3 per cent, taking both to their strongest level since the middle of last week.
Russia’s rouble advanced 0.2 per cent to hit a one-month high, lifted by oil prices rising by more than 1 per cent.
Currencies and stocks across central and eastern Europe traded flat to higher as data painted a mixed picture; Poland’s manufacturing sector hit a 1-year low while, in Hungary, the index jumped well above the long-term average in September.
Bourses in Prague and Warsaw were treading water, while stocks in Budapest gained 0.2 per cent and Bucharest added more than 1 per cent.
On the currency side, the zloty and the forint strengthened a touch against the euro, while others in the region chiefly traded flat.
In Zambia, the kwacha firmed as much as 5 per cent against the dollar after the central bank stepped into the market again.
The currency of Africa’s second largest copper producer has chalked up double-digit losses over the past week, due to sinking copper prices and woes at trading and mining company Glencore, one of the country’s biggest employers.
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