Emerging Market Stocks Soar Amid Improved Economic Outlook

Emerging market stocks saw their biggest weekly jump in almost four years, spurred by an improved economic outlook and a buying spree in China shares. China's central bank's plans to cut reserves boosted stock markets further. The MSCI index for EM currencies also stood at record highs.

Emerging market stocks marked their most significant weekly increase in nearly four years on Friday, buoyed by a robust economic outlook that ignited a buying spree in heavyweight Chinese shares. Concurrently, the currencies index headed for its longest winning streak since 2015.

The Shanghai Composite index surged almost 3% in a single day, achieving its largest weekly rise of nearly 10% since 2008. Meanwhile, China's blue-chip CSI300 index leapt 4.5%, clinching its best week since 2014. The MSCI index for emerging market stocks climbed 1%, maintaining its two-year high levels for the seventh consecutive session. Hong Kong's Hang Seng index also jumped 3.2%, marking its fourth straight day of gains.

Investors responded positively to China's central bank's decision to cut the reserve requirement ratio by 50 basis points, the second such reduction this year aimed at bolstering economic growth. According to abrdn's Global Macro Research team, recent policy measures have already started to modestly loosen financial conditions, even ahead of the freshly-announced changes. "This 50-bps cut will provide a welcome boost to disposable income and may help consumer sentiment to recover over time," the team stated.

(With inputs from agencies.)