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By 3 Minute Read* Chinese markets rise over 1%, although Q2 GDP falls short of expectations* South African rand extends recovery into second day* Russian rouble under pressure from oil weakness 15 JULY (Reuters) – Emerging market equities rose on Thursday as mixed Chinese GDP data fueled expectations for further liquidity measures, while currencies rose in response to dovish comments from US Federal Reserve Chair Jerome Powell. The MSCI Emerging Markets Index climbed 0.9 percent to 1,350.73 points, its best level in nine days. Chinese stocks, which make up the majority of the emerging market index, climbed more than 1% as investors awaited more liquidity measures from the People’s Bank of China (PBOC) following slower-than-expected second-quarter economic growth. The main Chinese technology businesses, Alibaba and Tencent, both increased by roughly 2.8 percent and 1.7 percent, respectively. Last week, the People’s Bank of China (PBOC) lowered reserve requirements for banks, allowing them to discharge nearly 1 trillion yuan ($154.64 billion) in liquidity. Some, however, interpreted the action as dovish, arguing that it showed a stalling in the post-pandemic economic recovery. The reserve rate drop, according to Mitul Kotecha, chief EM Asia and Europe analyst at TD Securities, was a “limited attempt to maintain liquidity stable rather than a step toward policy easing.” “As trade slows, we expect manufacturing output to drop further in the months ahead, but services, particularly retail expenditure, are expected to catch up, helping to offset the likely dip in activity.” The value of the Chinese yuan increased by 0.1 percent. As oil prices plummeted on news that top OPEC members had agreed to raise production, Russia’s rouble fell 0.3 percent, making it one of the worst performers in the Europe, Middle East, and Africa (EMEA) area. MSCI’s emerging market currencies index rose 0.2 percent on Wednesday, as Powell’s comments reassured investors that the Fed would maintain policy slack for the time being to support economic development. High-yielding emerging market assets benefit from the potential of low U.S. interest rates. Increased viral infections in Asia, however, slowed progress. The rand advanced 0.4 percent against its counterparts in EMEA, extending its rebound for the second straight session. The rand has fallen to a three-month low due to fears of growing violence in the country. Poland’s zloty fell 0.4 percent against the euro in central Europe, as a disagreement between the country and the European Union over local judicial changes worsened. In recent sessions, the zloty has trailed behind its peers, the Hungarian forint and the Czech crown, as the central banks of those two currencies began tightening policies. See tmsnrt.rs/2egbfVh for a GRAPHIC of developing market FX performance in 2021. See tmsnrt.rs/2OusNdX for a GRAPHIC on MSCI emerging index performance in 2021. FOR THE LATEST NEWS IN THE EMERGING MARKETS See the market report for CENTRAL EUROPE. See the TURKISH MARKET REPORT. See the RUSSIAN market report. Ambar Warrick contributed reporting, and Shailesh Kuber edited the piece./nRead More

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