Updated December 27th, 2023 at 15:32 IST
Emerging markets soar to highest levels since August, fueled by strong Chinese performance
China's November industrial profits demonstrated double-digit growth, buoyed by an overall improvement in manufacturing.
In a surge led by robust gains in Chinese shares on the back of positive economic indicators, emerging markets stocks reached their highest levels since August on Wednesday. The MSCI's gauge of emerging market stocks rose by 1.0 per cent as of 0903 GMT, supported by a steady performance in currencies against the Dollar, which saw a 0.1 per cent increase.
China's November industrial profits demonstrated double-digit growth, buoyed by an overall improvement in manufacturing. However, soft demand continued to limit business growth expectations, prompting calls for additional macro policy support. The benchmark Shanghai Composite index rose by 0.5 per cent, and the blue-chip CSI 300 index added 0.4 per cent.
JP Morgan economists noted that the impact of the latest policy support measures on domestic industrial and consumer demand in China would take time to materialise. While fiscal and monetary policy are expected to maintain a growth-friendly stance, the probability of heightened policy stimulus is deemed low, according to JP Morgan.
Hong Kong shares rebounded, registering a 1.7 per cent gain, driven by a rally in gaming firms. Regulators pledged improvements to proposed draft rules that had previously caused a sharp decline in their stock prices.
Investor confidence in risky emerging-market assets increased, influenced by the US Federal Reserve's dovish stance and a softer inflation report the previous week, fueling expectations of potential rate cuts as early as March.
The MSCI's stocks index is positioned for gains exceeding 5 per cent for the year, poised to break a two-year declining trend. Similarly, the currencies index is on track for a 4 per cent gain, recovering from losses incurred last year.
In Central and Eastern Europe, the Hungarian Forint and Polish Zloty remained relatively stable against the Euro, while the Czech Crown experienced a 0.4 per cent decline, with no major economic data releases scheduled in these countries.
The Turkish Lira touched fresh lows at 29.3915 per dollar, highlighting ongoing challenges in the Turkish economy. Meanwhile, Russia's Rouble maintained stability against the greenback ahead of anticipated economic data releases later in the day.
Looking ahead, economic data releases for the day include Israel's industrial output and Argentina's retail sales, contributing to the ongoing assessment of global market dynamics.
(With Reuters inputs.)
Published December 27th, 2023 at 15:32 IST