EMERGING MARKETS-EM stocks extend wins after Trump ends shutdown; South African assets rally

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EM stocks up 0.37%, FX up 0.13%

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South African markets rally on lowered inflation target

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Poland's Q3 GDP at 3.7% y/y, in line with forecast

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Moody's Ratings affirms Panama's Baa3 ratings, maintains negative outlook

By Nikhil Sharma

Nov 13 (Reuters) - Emerging market stocks extended gains on Thursday after U.S. President Donald Trump signed legislation ending the longest government shutdown in history, while South African markets rallied on optimism over the budget review.

An index tracking emerging market stocks was on track to extend gains to the fourth session, up 0.23%, echoing strength across broader Asian equity markets.

A separate index for EM currencies was up 0.13%, with a softer dollar allowing currencies elsewhere to shine.

Trump's signature on the bill on Wednesday will extend federal government funding through January 30, bringing furloughed workers back to their jobs and allowing the release of delayed major economic data that had clouded the Federal Reserve's interest rate policy outlook.

"It seems that investors are bracing for major U.S. data releases to be on the soft side, which would strengthen the case for the Fed to consider lowering interest rates at its last meeting and, more importantly, to continue easing monetary policy over this 12-month horizon," said Piotr Matys, senior FX analyst at In Touch Capital Markets.

"And such prospects are obviously positive for emerging markets."

Elsewhere, the South African rand jumped 0.5% to near a three-year high against the dollar, lifted by continued optimism following the previous day's budget review, in which the government cut its inflation target to 3% - the first such change in 25 years.

The Johannesburg Stock Exchange's Top-40 index jumped 2.3% and government bonds also rallied. There was also market speculation that S&P Global Ratings would upgrade South Africa's sovereign rating at its scheduled review on Friday.

In Central-Eastern Europe, Hungarian bonds remained in focus after Prime Minister Viktor Orban's cabinet hiked its budget deficit forecast, prompting JPMorgan to downgrade government bonds to "market weight" from "overweight" on Wednesday.

Hungary's 10-year bond yield has risen 21 basis points in the previous two sessions. The currency forint fell 0.32% on the day, having fallen about 0.4% this week so far.

Budapest stocks rose 0.32%. Latest figures reveal industrial output remained stable in September at 1.3%.

In Romania, the central bank held its benchmark rate at 6.50% on Wednesday, as expected, at its last meeting this year. It cautioned that inflation would only return to target in the first quarter of 2027, later than previously expected.

Bucharest stocks added 0.24% and the leu currency was little changed. Fresh data show factory activity returned to expansion in September, following a contraction the month before.

The Polish zloty was flat, while Warsaw's benchmark index jumped 0.62% after data showed the economy expanded 3.7% year-on-year in the third quarter compared to a 3.3% rise in the previous quarter.

The Czech koruna was steady, while Prague's main stock index edged up 0.3% to trade at a record high. Data showed the Czech current account showed a surplus of 29.36 billion crowns ($1.41 billion) in September, beating the forecast.

The Czech Republic remains in the midst of a leadership transition and will resubmit its 2026 state budget plan to a newly elected parliament

Prime Minister-hopeful Andrej Babis has said the draft lacks billions of euros needed for infrastructure projects and social spending. Babis' election pledges of higher spending could increase the country's fiscal deficit.

Elsewhere, Moody's Ratings on Wednesday affirmed Panama's long-term credit ratings at Baa3 while maintaining its negative outlook on the Central American nation, citing risks with its fiscal consolidation process. The country's dollar bonds were mixed.

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