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South African stock market hits record high

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Sri Lankan president dissolves parliament to clear way for

polls

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Czech interest rate decision due

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EM stocks up 0.4%, FX up 0.2%

By Ankika Biswas

Sept 25 (Reuters) - Chinese stocks continued to ride the

stimulus momentum on Wednesday, as hopes of economic rebound

sent the main stock indexes to over two-month highs, while Sri

Lanka's president dissolving parliament saw its dollar bonds

regain lost ground.

Chinese shares climbed over 1% and Hong

Kong's stocks hit a four-month high, gaining for a second

day on the back of Beijing's wide-ranging stimulus package that

boosted commodity prices and emerging market assets on Tuesday.

The offshore yuan retouched a 16-month high during

the day, briefly trading below the key 7-per-dollar level for

the first time since May 2023.

"Against the prospect of more Fed cuts amid China's policy

support for its economy and markets, CNY has scope to play

catch-up to the recovery in Asian currencies," DBS strategists

noted, referring in part to the prospect of more U.S. rate cuts.

While the stimulus measures have raised expectations that

Beijing will follow soon with a fiscal package to complement the

monetary and financial moves, analysts have raised doubts about

their efficacy given weak consumer demand.

The MSCI EM stocks index has been on a run, on

track for a five-day winning streak, with China's stimulus cheer

adding to the optimism sparked by the U.S. Federal Reserve's

rate cut last week. The currencies index also

rose 0.2% to scale a fresh all-time high.

On the political front, Sri Lanka's newly elected President

Anura Kumara Dissanayake dissolved parliament to clear the way

for a snap general election and is set to give a speech at 1400

GMT. Dissanayake on Tuesday named college professor and

first-time lawmaker Harini Amarasuriya as prime minister.

Sri Lanka's sovereign dollar bonds, such as the 2025

maturity one, gained around 2 cents, Tradeweb

data showed.

The country's benchmark stock index jumped 2.4% to

hit a near two-month high, on track for its first seven-day

winning streak since April.

South Africa's main stock index hit a record high,

climbing 1.4%, with investors returning after Tuesday's market

holiday, while the rand firmed 0.2% against the dollar

and defended its 20-month high.

Investors will also be on the lookout for the Czech

Republic's monetary policy decision due during the day, with a

25 basis points rate cut expected. That would come on the heels

of Hungary's similar-sized rate reduction the day before.

While the Czech crown was largely flat against the

euro, the Hungarian forint slipped 0.2%.

Ghana's monetary policy meeting also starts during the day.

HIGHLIGHTS:

** Dissanayake's push for Sri Lanka economic change leaves

IMF deal, debt rework in limbo

** China bond market opening offers no panacea to debt-laden

African states

** Colombia legislative committees reject 2025 budget

proposal

** Survey shows Mexico central bank likely to cut interest

rate to 10.50%