Emerging-market stocks yesterday advanced and currencies pared losses, as investors wagered the US Federal Reserve’s dovish stance on interest rates would weaken the US dollar and boost the appetite for higher-yielding assets. Russia’s ruble rebounded.
Saudi Arabian shares rose toward the highest level since Jan. 6, trading within 0.6 percent of a bull market. Indian equities extended a three-week rally and bonds gained for an eighth day as investors bet the central bank would reduce borrowing costs. China’s benchmark gauge rose to a two-month high after policymakers loosened controls on margin lending. The ruble rose as Brent crude traded near US$41 a barrel.
Developing-nation stocks entered a bull market last week and inflows into exchange-traded funds that buy emerging-market assets increased to the most in almost two years as the odds of an aggressive US rate policy receded. With European policymakers taking borrowing costs deeper into the negative territory, investors are betting central banks will remain supportive of growth.
“It’s a continuation of the dovish Fed trade,” said Michael Wang, a strategist at hedge fund Amiya Capital LLP in London. “The [US] dollar could continue to trade weaker against emerging currencies until US data turn much stronger. The Fed could have a higher tolerance for inflation before they turn more hawkish.”
The MSCI Emerging Markets Index gained 0.1 percent to 827.55 at 10:43am in London, rising for a fourth day. Six of the 10 industry groups advanced, led by healthcare stocks. The gauge trades at 11.6 times forecast earnings of its constituents, a 27 percent discount to advanced-nation shares.
A gauge of 20 developing-
nation currencies slipped less than 0.1 percent.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
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