February 11, 2020 / 9:58 AM / 12 days ago

EMERGING MARKETS-EM assets rise as pace of new coronavirus infections slows

* Slowing number of new coronavirus cases calm nerves

* Optimism over virus containment overdone - analyst

* High-yielding S.African rand gains

By Shreyashi Sanyal

Feb 11 (Reuters) - Emerging market assets rose on Tuesday, as demand for riskier assets picked up due to a slowdown in the number of new coronavirus cases, but analysts warned the optimism could be overstated.

China recorded a daily drop in new cases, offering a glimmer of hope that the epidemic might be peaking. It has so far killed more than 1,000 people, with concerns growing over how damaging its impact would be on the world’s second largest economy.

China’s top medical adviser on the outbreak said the epidemic may peak in February and then plateau before easing.

“It seems that markets have assumed the worst is over with regards to the coronavirus,” said Piotr Matys, emerging markets FX strategist at Rabobank.

“But optimism that the virus is contained is overdone because we haven’t seen concrete evidence, so we maintain a cautious view.”

Still, MSCI’s index for emerging markets stocks rose 0.7%, following two days of declines, while its index for currencies gained 0.2%.

Among currencies, South Africa’s rand firmed 0.5% versus the dollar as investors loaded up on high-yielding currencies. Markets will also be watching out for President Cyril Ramaphosa’s annual speech at the opening of parliament on Thursday for clarity on policy and reform.

“The rand is one the best indicators of market sentiments, it is a high yielder. The rand leading gains today is an indication of risk appetite returning to emerging markets,” Matys said.

The yield-seeking strategy also pushed the greenback to a four-month high against its rivals.

Russia’s rouble also firmed, keeping pace with rising oil prices and other emerging-market currencies.

Investors also await U.S. Federal Reserve Chair Jerome Powell’s first of the two updates a year to Congress on Tuesday, where he is likely to sound fairly upbeat about the outlook for U.S. economic growth.

Currencies in central and eastern Europe - Hungary , Romania and the Czech Republic were relatively unchanged against the euro.

For GRAPHIC on emerging market FX performance in 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, 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 Shreyashi Sanyal in Bengaluru Editing by Arun Koyyur)

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