London: Wall Street's record run helped emerging stocks sail to new 19-month highs yesterday with year-to-date gains of over 10 percent, while the rand firmed ahead of a key budget speech by the finance minister.
MSCI's emerging equity index firmed half a percent , led by a 1 percent rise in Hong Kong after New York shares hit record highs and European bourses were boosted by upbeat factory data in Germany and France.
The index has posted a daily loss only three times so far in February, buoyed also by recovering economic growth and stronger company earnings. Analysts expect earnings-per-share to grow this year by 13.5 percent, according to I/B/E/S, having upgraded expectations from 12.4 percent in November.
Hong Kong on Wednesday said its economy grew a forecast-beating 1.9 percent last year and predicted 2-3 percent growth in 2017.
"The macro environment is still quite constructive for emerging markets despite the risk of further rate hikes from the Fed," said Phoenix Kalen, a strategist at Societe Generale.
"Also, the stabilising of commodity prices, the strong rebound in metals prices – these are quite beneficial for EM exporters so we are seeing a cyclical pick up in trade performance alongside positive external rebalancing."
Signs of improving growth have boosted central European shares this week, with Warsaw hitting 18-month highs, Budapest hovering at record highs and Bucharest on Wednesday touching a new nine-year high.
Recent data showed the Polish economy, the region's biggest, expanding at its fastest quarterly rate since 2007.
The Polish zloty touched a new 10-day high versus the euro while Hungary's forint traded just off five-week highs and the Romanian leu was at a one-week high.
The South African rand firmed 0.4 percent to the dollar despite jitters over a 1200 GMT budget speech by finance minister Pravin Gordhan who is trying to prevent a ratings downgrade to junk for his country. Commerzbank analysts said the budget could see the conflict between Gordhan and President Jacob Zuma "enter the next round", referring to speculation that Zuma wants to remove Gordhan.
