(Bloomberg) -- Stocks in emerging markets outside China rose for a sixth day, even as equities in Shanghai and Hong Kong were pummeled by investors worried that stimulus measures announced so far won’t be enough to revive the world’s second-biggest economy.
The MSCI Emerging Markets ex-China Net Return Index posted the longest winning streak since Sept. 26, aided by a rally in Taiwan Semiconductor Manufacturing Co. Meanwhile, the Chinese mainland benchmark, the CSI 300 Index, extended its losses since a peak last week to almost 10%. The country’s Hong Kong-listed gauges, the enterprise index and technology index, both fell more than 4.5% each.
While authorities in Beijing have unveiled hundreds of billions of dollars in supportive measures for the economy and markets, investors are looking for fiscal steps to reinvigorate consumer spending. This mismatch between expectations and actions has fueled volatility in Chinese stock markets, with wild surges in anticipation of breakthrough policy moves and big selloffs when announcements fall short.
Chinese stocks underperformed their EM peers for a fifth time in the past six days, according to the ratio of the MSCI indexes for both markets.
“Following the initial knee-jerk reaction, in large part due to low non-resident positioning, markets will need to see a combination of pointed macro impulses and sound micro reforms that pave the way for a robust recovery,” said Simon Quijano-Evans, chief strategist at Gramercy Ltd. in London. “Investors are looking for policy predictability and transparency in a country that spans the realms of capitalism and state control.”
While the monetary measures have failed to provide a sustained lift to Chinese stocks, they are already dragging on the country’s currency and with it the exchange rates of countries with close economic ties to Beijing. The onshore yuan weakened for the sixth time in the past eight sessions and traded at a one-month low. The Philippine peso, South African rand and Vietnamese dong were among other underperformers in emerging markets Tuesday.
The dollar traded little changed near a two-month high, leaving the MSCI EM Currency Index languishing near its weakest level in a month. That leaves EM carry trades heading for the first monthly loss since June.
Among the currency gainers was Hungary’s forint, which rose for a second day against the euro after touching an 18-month low last week. The currency started stabilizing after the central bank signaled that it would skip a rate cut this month, though it remained around the key 400 mark against the euro.
In the dollar-bond market, Egyptian securities posted some of the biggest advances among peers, according to the Bloomberg EM Sovereign Total Return Index. Local media reported Saudi Crown Prince Mohammed bin Salman was expected to arrive in Cairo, where he may announce new investments and projects.
Meanwhile, the World Bank faces a “challenging” task of raising a record amount of new money to help the most impoverished nations, a senior official from the lender told Bloomberg in an interview.
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