October 8, 2019 / 9:20 AM / 15 days ago

EMERGING MARKETS-China bounce helps emerging assets despite trade, Turkey woes

* Lira steadies after hitting 1-month low

* China stocks gain on return from holidays

* South Korea’s Kospi boosted by Samsung shares

By Sruthi Shankar

Oct 8 (Reuters) - Emerging market stocks and currencies found support on Tuesday from a soft dollar and a positive resumption of trading on Chinese markets after a week-long holiday.

But optimism was tempered by concerns about the U.S.-China trade talks and the fallout of Turkey’s military action in Syria.

The Turkish lira barely made up its lost ground, edging up 0.3% following a 2.4% slump on Monday after U.S. President Donald Trump threatened to destroy its economy if Ankara took a planned military strike in Syria too far.

The contradictory message followed Trump’s decision on Sunday to pull 50 American special forces troops out of northeastern Syria, opening the door for a Turkish incursion.

“There is a little bit of risk appetite coming, and this has helped the lira to a small bounce back,” said Antje Praefcke, FX and EM analyst at Commerzbank in Frankfurt. “The lira is generally under pressure because of the Syria issue, which is a risk.”

Investors have been closely watching tense ties between Ankara and Washington in recent months, with the countries at odds over a range of issues, including Syria and Turkey’s purchase of a Russian missile defence system.

Turkey’s sovereign dollar bonds slid further, while its main BIST 100 stock index, down about 2%, hit a two-week low.

With few signs of progress in the U.S.-China trade dispute, investors were cautious ahead of a round of crucial talks between trade officials this week.

Indeed, the prospects of a deal dimmed after Washington on Monday blacklisted Chinese companies over Beijing’s treatment of predominantly Muslim ethnic minorities.

Chinese stocks , however, closed modestly higher as a dim services sector survey reinforced hopes that Beijing will roll out more stimulus measures.

Hong Kong-listed shares also a rose, despite concerns over violent protests, with shares in Hong Kong’s bourse HKEX up 2% after it scrapped its unsolicited $39 billion approach for London Stock Exchange Group.

South Korea was also a bright spot, with the Kospi jumping 1% after an upbeat forecast from the world’s biggest semiconductor firm Samsung Electronics.

In emerging Europe, the Hungarian forint edged lower after data showed consumer inflation slowed to an annual 2.8% in September, below an expected 3% rise, according to a Reuters poll.

For GRAPHIC on emerging market FX performance 2019, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2019, see tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Sruthi Shankar in Bengaluru and Karin Strohecker in London; Editing by Alex Richardson)

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