August 8, 2019 / 9:35 AM / 4 months ago

EMERGING MARKETS-China data, steady yuan bring calm to emerging markets

* South Africa’s rand recovers from 11-month low

* China records best export growth since March

* EM stocks set to break 11-day run of losses

By Sruthi Shankar

Aug 8 (Reuters) - Emerging market stocks broke their second longest run of losses ever and currencies stabilised on Thursday as positive trade data out of China, which also signalled curbing a slide in its yuan, gave investors some relief after this week’s rout.

The South African rand recovered from a 11-month low hit on Wednesday after its central bank chief said the country would not look for support from the International Monetary Fund, while the Turkish lira and the Russian rouble gained over 0.3%.

Tempering recession fears for now, data from the world’s second largest economy showed exports unexpectedly returned to growth in July despite escalating U.S. tariff pressure. July exports rose 3.3% from a year earlier, while analysts had expected a 2% drop.

The yuan firmed despite the central bank setting its official midpoint past the key level of 7-per-dollar, which was firmer than market expectations.

“The yuan stabilised around seven and the odds are that this may last for a while as the PBOC calms down the market,” said Sebastien Galy, macro strategist at Nordea Asset Management.

Risk assets including developing world markets, commodities and equities suffered sharp losses on Wednesday after surprise interest rate cuts from a trio of Asian central banks and weak German data compounded fears that a long-drawn U.S.-China trade war will tip the world into recession.

In response, the benchmark U.S. yields fell to near record lows, while the average yield on local currency debt for emerging markets was at its lowest since May 2013.

The Philippine central bank was the latest to cut its benchmark interest rate by 25 basis points on Thursday as widely expected. Its dollar was up 0.3%.

The Indian rupee jumped 0.7% after officials said the government was likely to roll back the recently imposed higher taxes on foreign portfolio holders. The gains came as the country faced strained diplomatic ties with Pakistan over India’s withdrawal of special status to Kashmir.

In east Europe, the Hungarian forint jumped 0.3% against the euro. Data showed the country’s headline inflation slowed to 3.3% in July, matching forecasts but core inflation was a touch below analysts’ forecasts.

Meanwhile, MSCI’s index of emerging stocks rose 0.8% - ending a 11-day run of losses - its second worst stretch on record since the height of the Greek crisis in 2015 and back in 1990.

Chinese stocks jumped nearly 1%, leading gains among Asian stock markets, while Russia’s MOEX index gained over 1% as oil prices jumped.

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; Editing by Stephen Powell)

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