Most stocks in emerging markets rose Wednesday after the recovery of oil prices benefit exporters of raw materials. Russian ruble recovered some of its losses from last week, but the currencies of developing countries in Asia weakened to a record low, writes Bloomberg.
Oil and Fed
Oil prices grew on expectations of a decline in inventory reserves of crude oil in the United States. Brent crude, however, was unable to recover any accumulated losses in recent weeks and is trading around $ 50 a barrel. On prospects for commodity currencies and put pressure expectations that the Federal Reserve will take increasing interest in September. This leads to an increased interest of investors to the dollar and capital flight from emerging markets.
Fed president Dennis Lockhart in Atlanta told the Wall Street Journal, that only a significant deterioration in economic data could give the central bank to raise interest rates next month.
Thanks to the slight rise in oil prices the Russian ruble gained 0.8% against the dollar. While the index of Bloomberg, tracking the currencies of 20 major developing countries fell for the fifth straight day to a record low. South Korean won slid 0.7 percent against the dollar to its lowest level since June 2012 and the Malaysian Rigi fell 0.6 percent to its lowest value since 1998. The Thai baht depreciated to six-year low after the decision of the central bank left interest rates unchanged.
While the currencies of developing countries depreciated shares give signs of recovery. The index of shares of emerging markets MSCI remained stable at around 892 points, 399 shares in the index rose, while 255 fell. Seven of the ten industry groups reported growth during the last session, led by energy and industry sectors. Since the beginning of the year the index fell by 6.8 percent, as companies it traded for an average of 11.2 times their annual profits. For the same period the index of the world’s largest equities MSCI World has advanced 2.7%, while the average score reached 16.3 times earnings.
The main stock index in Indonesia, Vietnam and India gained by between 0.7 and 1.3 percent. In China, the Hong Kong Hang Seng China Enterprises rose 0.5%, but the Shanghai Composite continued its decline. Despite the unprecedented interventions by the Chinese authorities the capital markets are still unable to recover. The value of shares traded in Shanghai fell by 65% compared to this year’s peak reached in mid-June.