Emerging-Market Stocks Advance in Final Push for 2024 Gains
(Bloomberg) — Emerging market stocks rose on Tuesday as the main stock index made a year-end advance on the back of an Asian technology rally and signs that China is preparing to unleash more stimulus.
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MSCI’s benchmark index of EM shares rose for a second straight day in light trade ahead of the holiday, helped by a 1% gain in Chinese stocks.While it is heading for a total return of around 9%, it is still well below the performance of developed market shares that have bounced back this year. more than 20%.
MSCI’s gauge of new currencies fell for a second session. The index hovered around its lowest level since August and is on course for a 0.5% loss this year. Meanwhile, emerging market sovereign and corporate dollar bonds returned about 7% in 2024. , according to the Bloomberg index.
A number of headwinds are looming for developing countries, including President-elect Donald Trump’s threats to raise tariffs, geopolitical tensions and signs of sticky inflation, but some investors remain optimistic.
“2025 will bring volatility again, especially when Trump officially arrives in power, but EM companies have very good foundations to help them navigate this uncertain environment,” said Arno Bue, senior fixed income portfolio manager at the Bank of Zurich. “Net leverage is very low for investment grade, but high-yielding companies and default expectations are also very low.”
On a positive note for markets, Chinese markets got a boost from a Reuters report that policymakers plan to sell a record three trillion yuan ($411 billion) in special treasury bonds in 2025 to boost the slowing economy. bringing this year’s growth to more than 16%.
Asian technology stocks also extended their recent rally as Taiwan Semiconductor Manufacturing Co. hit a record high, putting the world’s largest contract chipmaker on course for its best annual performance in 25 years.The stock rose as much as 1.4% on Tuesday, ahead of earnings clearing to a flat finish.Alibaba Group Holding Ltd. shares were also up 2.7%.
The Colombian peso rose 1% to outperform emerging currencies, while the South African rand was a notable laggard, down 0.6%.The South Korean won was weighed down by weak consumer confidence data as well as the impeachment of the opposition party’s acting president, Han Dak-soo. with a promise to start a process.
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