* Emerging markets climb for 9th day in 11 to 19-month high
* Rand under 13 per dollar; rouble, real, peso, EGP strong
* Average local currency gvt debt yields lowest since Nov.
By Marc Jones
LONDON, Feb 15 Emerging market stocks hit a
19-month high on Wednesday, with even hints of looming U.S. rate
hikes and the dollar's longest unbroken rise since 2012 unable
to knock them off their stride.
MSCI's 26-country emerging market equity index hit
its latest peak thanks to its ninth climb in the last 11 days,
taking its gain since the end of December to almost 12 percent.
Many of the big EM currencies and bond markets also
continued to shine.
South Africa's rand rose 0.7 percent to go under 13
per dollar for the first time since October 2015, while Russia's
rouble was up, just about, for a tenth day in the last 11
and at its highest since July 2015.
Aberdeen Asset Management's Kevin Daly said the
across-the-board strong performances were down to a "goldilocks"
combination of factors, including broadly subdued global bond
yields, inflation and improving growth.
"If you add it up its a pretty strong backdrop for higher
yielding EM assets," Daly said.
"Markets maybe are also picking up on some of the more
conciliatory comments from Trump on China on the one China
policy and that he hasn't followed through on the currency
Egypt's pound has been roaring too as investors have
swept back in following its devaluation late last year. It
climbed 0.3 percent on the day taking its surge over the last
couple of week to almost 17 percent.
The upbeat sentiment also kept the cost of insuring exposure
to South African and Turkish debt pinned near two-year and
five-month lows respectively.
Data from Markit showed that five-year credit default swaps
(CDS) for South Africa were trading at 190 basis
points (bps), close to the 188 bps level hit on Tuesday which
was the lowest since early March 2015.
South African headline inflation slowed to 6.6 percent in
January, weaker than forecast, data there showed.
Turkey's Finance Minister Naci Agbal meanwhile said its budget
spending in January was in line with targets.
RAMPANT REAL, PERKY PESO
William Jackson, a senior emerging markets economist with
Capital Economics, pointed to the recent rebound in the Turkish
lira which was barely budged on the day at 3.65 per dollar.
"It might be that the sell-off we saw in January caused it
to overshoot and it has recouped some of those losses."
"The central bank did raise interest rates - it wasn't a
convincingly large rate hike but it still showed it was able to
raise interest rates. That may have helped to ease some of the
Nigeria's recently sold bond continued to climb while in
central and eastern Europe, Hungary's stock market hit its
latest record high, Czech shares continued their
strong start to the year, though Poland's took a
Overnight in Asia, there had been mild weakness for the
region's currencies such as the South Korean won,
Thai baht and Philippine peso after the dollar got a
boost from Federal Reserve Chair Janet Yellen who said another
U.S. rate hike was likely in one of its upcoming meetings.
In Latin American, though, the Brazilian real hit its
strongest level in more than a year and a half, following a rise
in capital inflows and after the central bank resumed currency
intervention following a two-week pause.
"The Mexican peso has also been doing very well," said
Aberdeen's Kevin Daly. "It looks like the diplomacy (with the
U.S.) is improving a little." The peso is up almost 9 percent
For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
(Reporting by Marc Jones; Editing by Tom Heneghan)