September 20, 2019 / 9:01 AM / 5 months ago

EMERGING MARKETS-India tax break, China rate cut lift stocks; FX rises

* Indian stocks up more than 5% on big corporate tax cut

* China cuts new benchmark rate for a second month

* Rouble eyes third week of gains tracking higher oil prices

By Agamoni Ghosh

Sept 20 (Reuters) - A surge in Indian shares led emerging markets higher on Friday, after the government announced deep cuts in corporate taxes to revive flagging growth, while a widely expected domestic interest rate cut from China added to the chipper mood.

Indian shares surged 5% and were set for their best day in over a decade after Finance Minister Nirmala Sitharaman said the effective corporate tax rate would be lowered to about 25% from 30% and scrapped the minimum alternative tax for domestic companies.

The move is aimed at reviving private investment, which may help lift growth for Asia's third-largest economy from a six-year low that has caused job losses and fuelled discontent.

"It is an additional measure after the bank mergers and the capital infusion but potential growth is still on a downward trajectory," said Hugo Erken, head of international economics at Rabobank.

Growth "will struggle to push that 7% threshold unless a large scale stimulus package comes by," he said.

That surge helped MSCI's index for emerging market stocks rise 0.5%, with the rupee also the star performer among emerging currencies, strengthening 0.6%.

Adding to stimulus hopes was a cut in China's key domestic lending rate for the second month in a row, aimed at lower borrowing costs for companies and consumers in the slowing economy.

China's two main share indexes moved 0.3% higher but ended the week lower as Beijing's stance on overall monetary easing was seen as cautious with policymakers remaining reluctant to join a global stimulus wave.

Indices outside Asia were mixed with Moscow stocks shedding 0.4% but those in Johannesburg and Istanbul moving 0.3% higher.

Most developing world currencies marched higher against as feeble dollar with South Africa's rand up 0.4%, recovering ground it lost in the previous session after the central bank left its main interest rate on hold at 6.5%.

Russia's rouble strengthened 0.3%, on course to deliver a third week of gains as oil prices headed for their biggest weekly gain in months.

For GRAPHIC on emerging market FX performance 2019, see For GRAPHIC on MSCI emerging index performance 2019, see

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Editing by Richard Borsuk)

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