Emerging Stocks Reach Two-year High, Yuan Leads Foreign Exchange Gain

Emerging-market stocks reached two-year highs on Friday, while China's yuan led biggest weekly gain since December.

Developing-country assets have taken heart in recent days from relatively dovish minutes from the last U.S. Federal Reserve meeting, though disappointment over the scale of oil supply cuts announced by OPEC kept the MSCI emerging equity index from adding significantly to gains.

The benchmark has, however, posted a rise every month in 2017, for gains of almost 18 percent to date.  According to JPMorgan, developing market funds continue to receive new money, whereas data showed inflows halved from the previous week to $1.2 billion for equity funds and $1 billion coming into emerging debt funds.

With the VIX volatility gauge at two-week lows and just off recent multi-year troughs, the backdrop remains positive for emerging markets, said Cristian Maggio, a strategist at TD Securities.

Currency gains were led by the yuan which hit the firmest level since February with a weekly 0.3 percent gain. This is partly down to hefty dollar sales by Chinese banks on Thursday following the Moody's rating cut.

Read more at Reuters.