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Emerging Stocks Rise a Second Day on Recovery Bets, Extending Weekly Rally
Emerging-market stocks advanced for a second day and currencies strengthened after data on China’s imports, Japan’s economic growth and U.S. jobless claims boosted investor confidence in the global economic recovery.
The MSCI Emerging Markets Index climbed 0.2 percent to 1,010.77 at 7 a.m. in London, extending this week’s gain to 0.7 percent. South Korea’s Kospi Index jumped to the highest level since June 2008 and the won appreciated for a third day against the dollar. China’s yuan gained 0.2 percent per dollar, heading for its biggest weekly rally since June.
China posted a third straight trade surplus of more than $20 billion in August as imports climbed 35.2 percent, faster than the median forecast in a Bloomberg News survey. Japan’s economy grew at quicker-than-estimated 1.5 percent annualized rate, the Cabinet Office said today. The reports from the world’s second-and third-biggest economies followed U.S. Labor Department data yesterday showing new applications for unemployment insurance fell to the lowest level since July 9.
“The economy is not slowing as much as many people feared,” Stephen Green, head of China research for Standard Chartered Bank in Shanghai, said in an interview on Bloomberg Television.
The MSCI emerging index has climbed 4.2 percent the past two weeks as investors reduced speculation that an economic slowdown in China and renewed recession in the U.S. may curb earnings growth. The 21-country gauge has climbed 2.2 percent this year, following a record 75 percent surge in 2009.
Fund Inflows
Investors added the most in six weeks to equity funds tracked worldwide, according to research firm EPFR Global. The funds took in a net $8.43 billion in the week ending Sept. 8, according to the Cambridge, Massachusetts-based company. About $1.87 billion was added to emerging-markets equity funds during the week, the data showed.
The yuan appreciated 0.17 percent to 6.7720 per dollar, bringing its weekly gain to 0.47 percent, according to the China Foreign Exchange Trade System. U.S. Treasury Secretary Timothy F. Geithner said Sept. 8 that China should let the yuan rise more quickly.
The Shanghai Composite Index of shares slipped 0.2 percent as property developers sank on speculation the government will intensify measures to curb real-estate prices. China Vanke Co. and Poly Real Estate Group Co. declined more than 2 percent.
Kospi Gains
South Korea’s Kospi rose 1 percent, while Taiwan’s Taiex Index advanced 0.7 percent and the Thai SET Index increased 0.5 percent. Exchanges in India, Indonesia, the Philippines and Malaysia were closed for holidays.
Japan’s Prime Minister Naoto Kan unveiled details of a 920 billion yen ($11 billion) stimulus package today, his first since taking office in June, to shelter the economy from slower global growth and the yen’s climb to a 15-year high against the dollar.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 2.83 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index.
To contact the reporter on this story: Michael Patterson in Hong Kong at mpatterson10@bloomberg.net.
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