LONDON May 21 Emerging stocks held steady on
Wednesday near 6-1/2 month highs as a decline on Wall Street
made investors cautious but Russian assets extended gains, with
the rouble hitting a four-month high versus the dollar.
Moscow stocks built on the recent rally fuelled by
expectations Ukraine's presidential election on Sunday will pass
off peacefully, helping to avert harsher U.S. sanctions on
Chinese stocks also rose on expectations of market reforms
in the coal sector, attracting investors who are keen to switch
away from expensive developed stocks.
"The scope for a big rebound in G10 is still limited and
that's supporting EM," said Luis Costa, strategist at Citi.
"It looks like we are heading for (Ukraine's) election day
without massive conflicts ... We are likely to see a resilient
performance (in Russian assets) on the back of market
He was referring to investors' headlong flight from Russian
markets at the height of the stand-off with Ukraine which left
them extremely underweight Russia. Many of those funds are now
trying to buy back Russian assets because of the high yields
MSCI's emerging equity index was unchanged on the
day. Still, the index has gained more than 3 percent this month.
According to Morgan Stanley, 72 percent of firms listed on
the MSCI EM index have reported their first-quarter earnings
results, broadly in line with expectations. Around a third of EM
firms have beaten consensus estimates.
CHINA, RUSSIA FIRMER
China shares rose 0.8 percent, led by coal stocks
after a news report said the National Development and Reform
Commission plans to establish two or three national markets for
Turkish stocks rose half a percent and the lira
rose 0.1 percent to 2.11 ahead of a central bank interest
rate decision on Thursday.
All but two economists in a Reuters poll predicted the
Turkish central bank will keep its one-week repo rate unchanged
at 10 percent. One economist forecast a 25 basis point cut and
another predicted a 50 basis point cut.
The central bank has repeatedly said it will keep monetary
policy tight until the inflation outlook improves significantly.
In Moscow, equities rose by up to 0.4 percent
while the rouble was steady at 34.51 per dollar, after
earlier hitting a four-month high of 34.45.
Top gas producer Gazprom rose more than 1 percent
on expectations that Russia and China would sign a long-awaited
and crucial gas supply deal. Russian Deputy Prime Minister
Arkady Dvorkovich said he hoped a deal with China would be
prepared in the "next few hours", ready for signing.
For GRAPHIC on emerging market FX performance 2014, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2014, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2014, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2014, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
(Additional reporting by Sujata Rao; Editing by Susan Fenton)