LONDON, Oct 18 (Reuters) - China's stocks hit a 26-month high on Wednesday as a twice-a-decade Communist Party congress began with promises to boost the economy.
Mexico's peso also added to its biggest jump since June after NAFTA trade ministers extended the deadline on talks.
Most of Asia's bourses fell overnight, forced to play catch-up to the biggest fall of the month for emerging market stocks on Tuesday, but investors started to buy again in European trading. This helped lift MSCI's emerging markets index into positive territory.
Chinese mainland stocks bucked the trend in Asia, with the blue-chip index closing at its highest since August 2015 as Chinese President Xi Jinping opened a critical Communist Party Congress.
But Koon Chow, emerging markets macro and FX strategist at UBP, warned not to read too much into Chinese financial markets during major political events. "During these events, state-owned financial institutions have an incentive to be supportive of their own markets," he said.
Xi pledged to build a "modern socialist country" for a "new era", and said China would relax market access for foreign investment, expand access to its services sector and deepen market-oriented reform of its exchange rate and financial system, while strengthening state firms.
Chinese stocks have surged almost 20 percent this year and even more on a dollar-adjusted basis.
On the currencies side, Mexico's peso firmed 0.2 percent against the dollar, adding to its near 1 percent leap on Tuesday. NAFTA trade ministers have extended the deadline on talks to reform the trade bloc, easing fears of a collapse.
But Chow said the peso's rally could be short-lived as the deadline extension did not guarantee smooth discussions.
"The demands on the U.S. side have been rather aggressive," he said, adding there was also uncertainty around next July's presidential elections in Mexico and concerns that (leftist) Andres Manuel Lopez Obrador will be the front runner.
South Africa's rand weakened 0.4 percent, pushed back for a third straight day. Investors are concerned by a second cabinet reshuffle in seven months by President Jacob Zuma.
Zuma is already unpopular with many investors after sacking respected finance minister Pravin Gordhan in March, a move that hit South African financial assets and helped tip the country's credit ratings into "junk" territory.
South African headline consumer inflation also quickened to 5.1 percent year-on-year in September.
Other currencies to come under pressure included Turkey's lira, which slipped 0.3 percent. The country's parliament ratified a three-month extension of the country's 'emergency rule' overnight and Prime Minister Binali Yildirim said on Tuesday Turkey would take measures to cut interest rates.
Tim Ash, a strategist at BlueBay Asset Management, said the extension of emergency rule was "disappointing" from a market perspective, as he sensed this had been one of the drivers for local capital flight over the past year or so.
In emerging Europe, Poland's zloty firmed 0.1 percent against the euro, hovering near three-month highs hit on Tuesday, whilst stocks rose 0.3 percent.
For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see) Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 1125.93 +0.27 +0.02 +30.58 Czech Rep 1056.82 +0.83 +0.08 +14.67 Poland 2519.76 +5.40 +0.21 +29.36 Hungary 38928.44 +18.66 +0.05 +21.64 Romania 8060.42 -3.38 -0.04 +13.77 Greece 764.30 +2.48 +0.33 +18.75 Russia 1147.01 +0.39 +0.03 -0.46 South Africa 51362.05 -148.11 -0.29 +16.99 Turkey 07283.22 +292.35 +0.27 +37.30 China 3381.37 +9.33 +0.28 +8.95 India 32598.16 -11.00 -0.03 +22.43 Currencies Latest Prev Local Local close currency currency
% change % change
Czech Rep 25.72 25.75 +0.09 +4.99
Poland 4.23 4.24 +0.16 +4.15
Hungary 308.03 307.83 -0.06 +0.26
Romania 4.58 4.58 +0.02 -1.00
Serbia 118.97 119.06 +0.08 +3.68
Russia 57.31 57.33 +0.05 +6.91
Kazakhstan 333.69 333.92 +0.07 -0.01
Ukraine 26.41 26.43 +0.08 +2.23
South Africa 13.44 13.39 -0.41 +2.13
Kenya 103.30 103.32 +0.02 -0.90
Israel 3.51 3.51 -0.05 +9.66
Turkey 3.68 3.66 -0.33 -4.07
China 6.62 6.62 +0.03 +4.88
India 65.09 65.03 -0.10 +4.39
Brazil 3.16 3.16 -0.01 +3.02
Mexico 18.75 18.77 +0.11 +10.49
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 304 -2 .03 8 06.70 1
(Reporting by Marc Jones and Claire Milhench; Editing by Matthew Mpoke Bigg)