LONDON: Emerging stocks hovered near 10-day highs on Thursday as oil price gains lifted markets in Russia and other oil producers, while hopes of a currency devaluation pushed Nigerian stocks to new 4-1/2 month highs.
Emerging assets have pushed higher this week helped by a strong performance on Wall Street and other developed markets, while oil prices have risen back above $50 a barrel for the first time in nearly seven months.
Higher oil boosted crude producers, with Russian dollar-denominated stocks up around one percent, and gains across Middle Eastern bourses.
The rouble firmed 0.2 percent and neighbouring oil producer Kazakhstan's tenge strengthened almost one percent against the dollar.
Russia sold $1.75 billion in 10-year eurobonds on Tuesday, although the issue was hampered by liquidity concerns.
One market participant said the bond was trading at around 100.9375-101.125 on Thursday in "good volumes", after rising more than one percentage point on Wednesday to close at 100.90.
"It's not a bad moment for oil credits and under normal conditions this bond would have flown off the shelves especially as they came in with a very decent premium," said Luis Costa, EM strategist at Citi.
"Eventually if this bond becomes euro-clearable it will become an easier instrument for Western banks to trade and that will bring more demand."
The benchmark emerging equity index was up 0.3 percent on Thursday, after surging 1.5 percent on Wednesday, its biggest one-day gain since April 13.
Emerging Europe opened strongly, with Polish stocks up around one percent to nine-day highs. Turkey bucked the trend however, with stocks slipping 1.2 percent and the lira weakening 0.2 percent against the dollar.
Both had gained this week following Prime Minister Binali Yildirim unveiled his new cabinet, confirming key members of the economic team, including reformer Deputy Prime Minister Mehmet Simsek.
However, whilst Simsek will continue to oversee the Treasury and Central Bank, his portfolio has shrunk, with regulation of banks and capital markets handed to a minister close to President Tayyip Erdogan.
"It seems that Simsek's portfolio is a bit reduced compared to what people had in mind before, which could explain some of the correction," said Sebastien Barbe, head of EM FX at Credit Agricole.
The market is now awaiting a speech from U.S. Federal Reserve chair Janet Yellen on Friday to see if she will deliver a more hawkish line consistent with recent comments from other Fed policymakers, which seemed to put a possible summer rate hike back on the table.
Nigerian stocks extended gains, up 0.6 percent and adding to Wednesday's 3.8 percent rise to touch their highest since January, while bonds rose on hopes of an end to the gridlock.
Nigerian dollar/naira forwards were trading a little below record highs hit on Wednesday, but remained elevated after the central bank signalled a shift to a flexible regime, abandoning the naira peg.
One-month non-deliverable forwards (NDFs) showed the naira trading at 264 naira per dollar, after hitting 276 naira per dollar on Wednesday.
JPMorgan said a dual-exchange rate regime, which authorities are expected to introduce, would not be a positive step.
"The degree of flexibility and level around which the interbank will be allowed to fluctuate will be critical in determining financial inflows," the bank told clients, adding that the uncertainty would keep "substantial" pressure on the naira.
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