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EMERGING MARKETS-EMEA stocks, FX rise as China's economic recovery quickens

Credit: REUTERS/ALY SONG

Emerging market stocks and currencies in Europe, Middle East and Africa rose on Monday as a batch of Chinese data indicated steady growth in the world's second-largest economy, although rising COVID-19 cases and the Caucasus conflict capped gains.

By Ambar Warrick

Oct 19 (Reuters) - Emerging market stocks and currencies in Europe, Middle East and Africa rose on Monday as a batch of Chinese data indicated steady growth in the world's second-largest economy, although rising COVID-19 cases and the Caucasus conflict capped gains.

China stocks retreated after the country reported a weaker-than-forecast GDP growth for the third quarter. However, analysts were encouraged by a broader upturn in retail sales and industrial output for September. .SS

Policymakers globally are pinning their hopes on a robust recovery in China to help restart demand as economies struggle with heavy lockdowns and a second wave of coronavirus infections.

The Chinese yuan CNY=CFXS recouped the day's losses to end a shade stronger to the dollar. In EMEA, the Turkish lira TRY= rose about 0.5%, while South Africa's rand ZAR= added 0.3%.

Central European currencies, which had led losses across EMEA last week, were muted against the euro.

"Despite the miss, China remains the only major economy to post growth for the first nine months of 2020. Other indicators are also pointing towards a broader recovery which could be reflected in GDP for the final quarter of the year, if sustained," Hussein Sayed, Chief Market Strategist at FXTM wrote in a note.

China's growth rate was "good" and domestic consumption was the main driver, analysts at ING wrote in a note.

Most EMEA stocks also rose, with the MSCI's index of emerging market stocks .MSCIEF adding about 0.3%.

Still, rising coronavirus cases in several parts of EMEA, as well as geopolitical tensions in the Caucasus weighed on broader gains.

Russian stocks .IMOEX, .IRTS lagged their peers, while the rouble RUB= retreated on weak oil prices, as well as escalating tensions in the Nagorno-Karabakh conflict.

A new ceasefire in the region appeared to be in jeopardy after ethnic Armenian forces and Azerbaijan accused each other of renewed shelling. The ceasefire was agreed on Saturday after a Russia-brokered deal a week earlier failed.

Coronavirus cases in Russia also continued to rise at a record-high rate, brewing concerns over potential lockdown measures to curb the virus' spread.

For GRAPHIC on emerging market FX performance in 2020, see http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2020, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

(Reporting by Ambar Warrick in Bengaluru, Editing by Sherry Jacob-Phillips)

((Ambar.Warrick@thomsonreuters.com; +91-80-6182-2837; Reuters Messaging: ambar.warrick.thomsonreuters.com@reuters.net; Twitter: @AmbarWarrick))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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