Economic news

EM-Stocks, FX Firm after China Data; S.Africa Budget Eyed

* Record high trade surplus for China in Oct

* EM shares rise, currencies up for third straight session

* Russian rouble lags, COVID-19 cases rise

Nov 8 (Reuters) - Emerging market stocks rose on Monday after China posted a record trade surplus for October, while currencies firmed against a steady dollar ahead of U.S. inflation data and central bank comments later this week.

Asian shares rose 0.2%, tracking Friday’s strong finish on Wall Street, although gains were capped by signs of weakening domestic demand in China and a tech-driven fall in Hong Kong Shares.

China’s export growth also slowed but topped estimates, helped by booming global demand ahead of winter holiday seasons, an easing power crunch and an improvement in supply chains.

MSCI’s index of EM shares rose 0.3%, with stocks in Russia, South Africa and Turkey rising between 0.5% and 1%.

With six U.S. Federal reserve officials due to speak on Monday, as well as Wednesday’s U.S. inflation data, the dollar held steady.

An index of EM currencies rose for a third straight session. Turkey’s lira moved further away from record lows, while South Africa’s rand rose for a fourth straight session.

Repeated power outages imposed by state power utility Eskom have been a major constraint on South Africa’s economic growth. It is expected to get some reprieve from a multi-billion dollar partnership between some developed nations to help the country quickly transition out of coal.

But more immediately, the medium-term budget on Nov. 11 could see an announcement of a basic income or family grant, which could spark fresh fiscal concerns and possibly lead to rand weakness.

“The main risk is related to a potential increase in spending... which would offset the recent efforts to stabilize debt and make the budget more vulnerable to abrupt changes in the global demand for commodities,” said Credit Suisse analyst Alexey Pogorelov.

Russia’s rouble slipped 0.2% despite higher oil prices, still digesting last week’s crude declines after some Russian market holidays.

Russia, Ukraine and Greece were at or near record levels of reported cases of COVID-19 since the pandemic started two years ago, according to a Reuters analysis.

“The idea that COVID-19 might be over soon is becoming questionable... inflation developments and monetary policy changes in reaction to these constitute the big unknown for the development of exchange rates,” said Ulrich Leuchtmann, head of FX and commodity research at Commerzbank.

In China’s embattled property sector, some Evergrande offshore bondholders had not received interest payments due on Nov. 6 by Monday morning in Asia, but now the 30-day grace period kicks in.

In ratings, Moody’s on Friday changed Saudi Arabia’s outlook to “stable” from “negative”, saying it was likely the government would reverse most of its 2020 debt increase while preserving fiscal buffers.

Reporting by Susan Mathew in Bengaluru; Editing by Ramakrishnan M.

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree