GRAPHIC-Brazil leads first quarter's rebound in emerging markets
(Repeats story that first ran Wednesday to additional clients; no change in text.)
By Marc Jones and Vincent Flasseur
LONDON, March 30 (Reuters) - Emerging markets are set to end the first quarter of 2016 with strong gains, something few investors would have bet on in January, after the sector's worst start to a year on record.
As this graphic shows (reut.rs/1ZKAaO6), emerging market stocks, currencies and bonds fell in the first few weeks of 2016 as oil prices slumped, China's economic growth faltered and interest rates in the U.S., and therefore the world, rose from record lows.
The rout left MSCI's benchmark EM equity index down 14 percent by the time it bottomed on Jan. 21. Bond market selling drove government bond spreads - a rough reflection of borrowing costs - up over 18 percent.
The recovery began with oil, as winter hit the United States, China threw stimulus at its economy and the Federal Reserve rolled expectations for interest rate increases.
"It had all been about the three C's. Commodities, China and central banks," said Aberdeen Asset Management investment committee member Kevin Daly.
When oil slumped to $27 a barrel, people were predicting some "pretty dark outcomes" for the global economy, Daly said. "But since then oil has bounced, the slowdown in the dollar has lead to a firmer Chinese currency and the market has priced out a lot of the Fed hikes, which is a real boost to risk appetite."
Two months on from the lows, MSCI's dollar-based emerging equity index is up 20 percent. Currencies - from the Russian rouble to the South African rand - have strengthened against the dollar and struggling parts of Africa have some of the best-performing bonds in the world. Continuación...