Emerging stocks at 12-day high
International / 04 Feb '13, 2:05pm
London - Emerging market stocks hit a 12-day high on Monday, benefiting from rising risk appetite in the wake of solid US economic data, with South African stocks touching a new all-time peak.
Data on Friday showing a modest rise in US employment and an increase in manufacturing activity indicated the world's biggest economy remains on a recovery path.
A rise in a China services sector survey also supported risk appetite.
“On Friday (US) non-farm payrolls were supportive - good for growth but not enough to threaten liquidity. We're still at that stage today but we see domestic concerns in some cases,” said Gaelle Blanchard, emerging market analyst at Societe Generale.
In South Africa gold mining companies led stocks to a new record high, with the main South African index up 0.34 percent.
It slightly outperformed the broader emerging market index, which was up 0.27 percent to its highest since Jan 23.
The South African rand, which tends to have an inverse relationship with equities, fell sharply against the dollar.
“We think the only way to support the economy in South Africa given that inflation is going back up is to weaken the currency. Maybe we're running out of steam in terms of slowing in the bond market,” said Blanchard.
Turkish bond yields rose slightly and the lira eased after data showed higher inflation in January, though the reaction was limited as the central bank had flagged a rise.
Turkish stocks rose 0.85 percent.
The Polish zloty was up 0.42 percent against the euro after Prime Minister Donald Tusk announced the government would soon launch an official debate on the country joining the euro. Polish stocks also rose.
The cost of insuring Hungarian debt as measured by five-year credit default swaps rose to the highest in over two months at 295 basis points, according to Markit, as investors looked ahead to the conclusion of an investor roadshow in Europe and the United States.
Many analysts expect the roadshow to result in the country's first international bond issue since May 2011, with an announcement possibly as soon as this week. - Reuters