Stocks race to record highs, FX rises ahead of Yellen

Stocks race to record highs, FX rises ahead of Yellen
Stocks race to record highs, FX rises ahead of Yellen

* Turkish stocks at record high, but lira muted

* Vietnamese stocks mark worst day in nearly 6 months

* Rouble lags as political concerns persist

Jan 19 (Reuters) – Emerging market stocks surged to a record
high on Tuesday as ultra-low interest rates and stimulus hopes
brightened their prospects, while most currencies ticked higher
as the dollar softened on uncertainty over U.S. policy.

The MSCI’s index of emerging market stocks jumped
more than 1% to a record high, with Asian stocks providing
support on the back of positive Chinese GDP data on Monday.

Turkish stocks were among the top gainers in
Europe, the Middle East and Africa (EMEA), rising 0.9% to a
record high. Russian and South African stocks
added about 0.2% each.

Emerging market stocks have benefited from loose monetary
policy and the prospect of a steady economic recovery this year,
hitting a series of record highs as they are seen offering
better returns than fixed income and currencies.

“We expect that the U.S. dollar will weaken further, policy
will remain accommodative, and additional U.S. fiscal support
will be forthcoming. All of these factors should contribute to a
supportive backdrop for EM assets,” Mark Haefele, chief
investment officer, UBS Global Wealth Management wrote in a

Most EMEA currencies rose as the dollar retreated before
testimony from U.S. Treasury Secretary nominee Janet Yellen.
Yellen is expected to talk up more stimulus spending, which is
likely to weaken the dollar.

South Africa’s rand was among the top gainers, as it
recovered from steep losses over the past few weeks after higher
U.S. yields pushed up the dollar. Investors will be watching for
cues from data and a central bank meeting later in the week.

Turkey’s lira logged relatively smaller gains in
comparison to its peers, as investors were still rattled by
President Tayyip Erdogan’s downplaying of high interest rates
last week.

Russia’s rouble lagged its peers, trading slightly
lower as a gain in oil prices was offset by the central bank’s
currency selling program, as well as fears of western sanctions
after the arrest of Kremlin critic Alexei Navalny.

Most central European currencies firmed to the dollar and
the euro.

Elsewhere, Vietnamese stocks plummeted 5.1% in their
worst day in nearly six months, with traders attributing the
fall to a correction after a series of steep gains.

For GRAPHIC on emerging market FX performance in 2021, see
For GRAPHIC on MSCI emerging index performance in 2021, see

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see
(Reporting by Ambar Warrick in Bengaluru; editing by Philippa

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