Indonesia country-specific ETFs were among the leaders on Thursday as traders hoped that a resolution to trade negotiations between the U.S. and China would help bring global trade back.
On Thursday, the iShares MSCI Indonesia ETF (NYSEArca: EIDO) rose 1.9% and VanEck Vectors Indonesia Index ETF (NYSEArca: IDX) gained 2.3%.
The emerging Asian market has been pummeled especially hard as investors exited emerging markets, due to the country’s perceived vulnerability from its reliance on global trade with its current account deficit and need to import oil. Indonesia was the most obvious target to dump in Asia during an emerging-market selloff because of the country’s dollar debts and its current-account deficit.
However, most southeast Asian markets closed higher Thursday as investors awaited details on the Sino-U.S. trade talks, along with growing optimism that the U.S. Federal Reserve would adopt a more dovish stance on interest rates this year to bolster investment sentiment, Reuters reports.
Trade Negotiations Continue
Chin and the U.S. are still locked in extensive trade negotiations, but the two countries are confident that they established a foundation for a resolution of each other’s concerns. The negotiations covered “ways to achieve fairness, reciprocity and balance in trade relations.”
“The spillover boost from continued optimism about U.S.-China trade talks is buoying sentiment,” Vishnu Varathan, a senior economist with Mizuho Bank, said in a note.
Furthermore, minutes for the recent Fed policy meeting revealed patience on futures rate hikes out of the central bank policy makers, further bolstering market sentiment Thursday. The four interest rate hikes last year helped prop up the U.S. dollar and also triggered a broader sell-off in riskier emerging assets.
“The takeaway is that the Fed is patient about assessing evolving global growth/financial market conditions, as well as patient about taking stock of tightening so far,” Varathan said in the note.
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