Emerging markets boost on China rally
August 15, 2016, 1:49 pm

Chinese markets rallied on the prospect of increased real estate industry activity on the heels of a possible trading link between Honk Kong and Shenzhen [Xinhua]

The benchmark Shanghai Composite (SHCOMP) Index closed up 2.44 per cent, firmly resting in the above 3,000 mark at 3,125.195 for the first time in 28 days and continuing a rally which began on Friday when word of the trading link was first announced. This is the SHCOMP’s best performance in seven months.

In Hong Kong, meanwhile, the Hang Seng Index closed up 0.73 per cent at 22,932.51.

The trading link would allow investors in both markets to buy each other’s stocks but the real boon would center around the real estate industry where analysts believe both Shenzhen and Hong Kong will see acquisitions and mergers.

The Hong Kong Economic Journal predicted on Monday that the link could be formally announced this week, with a prospective launch date set for the end of the year.

The Chinese rally – the announcement shows confidence in Beijing’s policies and economic stability – pulled up markets in other emerging markets.

The MSCI Emerging Markets Index – which measures equity market performance in some 23 emerging countries – rose 0.4 per cent Monday, beating its record in in July and registering the highest level in a year.

The MSCI EM index comprises 10 per cent of world market capitalization.

South Korea’s Kospi Index closed up 0.08 per cent at 2,050.47, nearing its highest level since November.

India’s benchmark Sensex closed up 1.05 per cent at 28,152 – some of its best performance in nearly a year.

Brazil’s Ibovespa Sao Paulo Stock Exchange opened up 0.28 per cent on Monday morning, coming in at 58,146.15 – its highest level in nearly two years.

Brazil’s currency, the real, also strengthened against the US dollar on Monday. The dollar fell to 3.1652 reais at press time.

In Thailand, a new statistical report showed that the economy beat forecasts and grew 3.5 per cent in the second quarter.

This helped the Thai currency, the baht, rise 0.4 per cent against the dollar.

However, recent terrorist attacks in southern Thailand weathered stock exchange performance as the SET Index fell 0.23 per cent at close on Monday.

In South Africa, the Johannesburg Stock Exchange (JSE) Index at press time was up 1.55 per cent to 17,139.00.

The rand currency also gained ground against the US dollar rising 0.5 per cent to its highest conversion rate since October 21, 2015.

In Russia, the ruble also gained against the dollar, strengthening by 0.7 per cent.

Read more: Investments pour into Emerging Markets

The BRICS Post with inputs from Agencies