Bethel Finance news:
A return of risk appetite helped emerging stocks recover from two lossmaking sessions on Wednesday while expectations of more interest rate rises pushed the Israeli shekel to a 2-1/2 year high against the dollar.
Investors have switched back into riskier assets in recent weeks and signs of willingness in emerging markets to cap price pressures by tightening policy have eased worries over inflation in the developing world.
Chile, Peru and Poland have all hiked rates in the past week, while the yuan hit a fresh trading high against the dollar on Wednesday as the People's Bank of China unleashed a new leg of yuan appreciation to help fight imported inflation.
“Emerging markets underperformance in the first quarter was all about inflation which tends to be bad news... But there are signs the worst part of inflation is behind us and that is allowing the secular emerging markets story to continue,” said John Lomax, head of emerging markets equity strategy at HSBC.
MSCI's benchmark emerging equities index rose 0.7 percent, propped up by strong closes in Asia, and outperforming global stocks that gained 0.3 percent,
Shares in Istanbul were in favour, rising 0.9 percent, playing catch-up after worries over high energy import bills and a record current account deficit suppressed shares at the start of the year.
Below-forecast inflation last week has also buoyed shares, which have outstripped their emerging market peers this month, rising more than 4 percent.
In contrast, Moscow's index fell 0.3 percent, adding to the previous session's 2.4 percent losses. Russian shares have been the star performer in emerging markets so far this year rising nearly 14 percent.
Eastern European stocks rose 0.6 percent while earlier the Indian exchange gained more than 2.2 percent and Seoul stocks ended up 1.6 percent.
RATE RISES ON THE HORIZON
The shekel hit its highest level since the end of September 2008 after a senior central bank official said on Tuesday that interest rates were still low, despite a surprise 50 basis point increase last month.
The Polish zloty rose 0.3 percent as inflation data later in the day is expected to support the need for further interest rate rises.
Analysts expect Polish March inflation to accelerate to 3.8 percent year-on-year, well above the top end of the central bank's target range of 2.5 percent plus/minus 1 percentage point.
“We now believe that the zloty will catch up with its peers after having lagged for some time. Monetary policy is likely to turn more currency supportive as inflation risks pick up and the MPC steps up its hawkish bias,” Societe Generale analysts told clients in a note.
They suggested a long zloty position against the forint, adding: “At 3.96, the zloty offers value relative to other currencies that have already strengthened a lot.”
The lira, which has also traded much weaker than a number of its emerging markets peers, firmed 0.6 percent as analysts said excess liquidity would support carry trades.
Carry trades involve selling a currency with a low interest rate and using the funds to buy higher-yielding assets.
“The bottom line is that given current external conditions, there is still more likely to be appreciation, rather than depreciation pressure on lira,” analysts at ING said in a note.
“In the meantime, external imbalances continue to grow in Turkey leaving lira vulnerable to a capital flow reversal.”
Elsewhere, Nigeria's benchmark 2021 dollar bond steadied at around 102 points. But analysts at Barclays said the risk of violence and election abuses at next weekend's presidential elections made it a good time to book profits after recent outperformance.
Overall emerging sovereign bonds were trading at a yield premium of 253 basis points over Treasuries - four bps tighter on the previous day.
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