Emerging-Market Stocks Rise as Mexico's Peso Sinks to Record Low

  • El-Erian says Yellen remarks more dovish than he was expecting
  • Mexican peso leads losses among peers on Nafta speculation

Emerging-market stocks rose after Federal Reserve Chair Janet Yellen signaled gradual interest-rate increases, bolstering the outlook for riskier assets. Mexico’s peso sank on concern over the future U.S. trade policy.

Equities in developed nations rose to the highest since Nov. 8 after Yellen said that “it makes sense to gradually reduce the level of monetary policy support,” according to the text of a speech to the Commonwealth Club in San Francisco. The so-called taper tantrum of 2013 sparked a selloff in emerging-market local bonds after then Chairman Ben Bernanke signaled prospects for reduced stimulus.

Yellen’s remarks Wednesday were “somewhat more dovish than what I would’ve expected given what’s happening on the ground in the economy,” Mohamed El-Erian, Allianz SE’s chief economic adviser, said in a Bloomberg Television interview.

Meanwhile, most currencies in developing nations retreated, led by Mexico’s peso, after the U.S. President-elect Donald Trump’s commerce pick said renegotiating Nafta will be a priority. Wilbur Ross signaled new talks with those countries will begin quickly after Friday’s inauguration. Currencies will still be challenged as “Trump risks to trade don’t appear fully priced in,” Citigroup Inc. analysts including Dirk Willer and Kenneth Lam wrote in a note.

Stocks

  • The MSCI Emerging Markets Index rose 0.3 percent at 4 p.m. on Wednesday to the highest level since Nov. 8.
  • Chilean shares led gains in Latin America
  • Kazakhstan’s KASE Index climbed to the highest since 2011.
  • Kuwait’s SE Price Index rose for an 11th day, the longest winning streak since 2014.

Currencies

  • The MSCI Emerging Markets Currency Index slipped 0.4 percent.
  • Seventeen out of the 24 currencies in developing nations tracked by Bloomberg retreated.
  • The Mexican peso fell 2 percent, the most among the world’s 16 major currencies.
  • South Korea’s won advanced to the highest level in more than a month.

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