Russia leads emerging market stock rally to hit four-month high
The MSCI index of developing-world stocks rose 1.8 percent on Monday to its highest level since February 26. The growth comes as strong economic data from emerging markets gave investors hope of an economic recovery.
Chinese stocks were the biggest boost to the index, as the country’s business activity recovered steadily. Strong economic readings from China and the US last week had partially restored investors’ risk appetite. That helped markets to offset concerns over an increase in coronavirus cases and new lockdown measures in the developed world.
Backed by the energy sector, Russian stocks led gains among markets in Europe, the Middle East and Africa. Rising oil prices have helped Russian exporters, as well as the national currency. Russia’s RTS index has gained over 30 percent since March.
“With an unprecedented amount of cash in the system, equities and high-yielding bonds are attracting a lot of interest from investors in the absence of acceptable yield from money markets and longer-term government bonds,” chief market strategist at FXTM Hussein Sayed wrote in a note seen by Reuters.
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“To keep this rally alive, we need more intervention from fiscal and monetary policymakers and for investors to believe that policies will be generous enough to provide further liquidity,” he said.
In contrast with emerging-market currencies, equities have been quicker to recover from the rout over the course of the pandemic. That occurred mainly thanks to increased cash on the market.
As for emerging market currencies, most of them gained little support from the increased risk appetite. The Russian currency fell about one percent against the US dollar on Monday, trading at 71.87 rubles.
Turkish stocks added about 1.7 percent, with the Turkish lira flat to the dollar. Central European stocks also rose, with the Hungarian forint and Polish zloty in a flat-to-low range against the euro.
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