Emerging Stocks Rise on China Stimulus Speculation

Emerging-market stocks rebounded from a two-week low as commodities rallied on speculation China will do more to support economic growth and bolster equities.

The MSCI Emerging Markets Index advanced 0.8 percent to 998.36 at 5:26 p.m. in New York, its first gain in four days. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong climbed 1.5 percent as Citic Securities Co. (6030), China’s biggest listed brokerage, jumped on speculation the government will take steps to boost the stock market. Equity gauges in Colombia and Hungary surged more than 1 percent.

The Shanghai Securities News reported that there is speculation the China Securities Regulatory Commission will announce market-boosting measures. Spanish protesters marched in Madrid this week as Prime Minister Mariano Rajoy presented a package of budget cuts. Orders for U.S. durable goods fell.

“China is the last major economy where you can see significant easing go on as Europe can’t do too much more and nor can America,” Gavin Redknap, an emerging-markets strategist at Nikko Asset Management, said by phone from London. “The market will seize any good news we hear from China.”

Commodities Gain

The S&P GSCI index of raw materials advanced. Copper for delivery in three months rose in London on speculation stimulus measures in China, the largest consumer of the metal, will boost demand. Crude oil rallied. The Russian ruble and Indian Rupee gained.

The Shanghai Composite Index surged 2.6 percent, the most among benchmark indexes in emerging markets. The Jakarta Composite index advanced 1.1 percent and Thailand’s SET Index added 0.9 percent.

The emerging-markets index has surged 6.5 percent this quarter as central banks from Europe, the U.S., Japan and China took action to stimulate economic growth. The measure has advanced 5.4 percent this month.

A gauge of technology companies rose 0.9 percent, second among all 10 industry groups in the MSCI Emerging Markets Index. (MXEF) The developing-nations MSCI gauge has risen 8.9 percent this year and trades at 11.3 times estimated earnings, data compiled by Bloomberg show. That compares with a multiple of 13.3 times for the MSCI World Index (MXWO) of developed countries, which has increased 12 percent in 2012.

China Profits

A government report showed Chinese industrial companies’ profits dropped for a fifth month in August, and a Bank of Korea index of manufacturers’ confidence fell from the previous month to stay near its lowest level since 2009. The reports spurred speculation the governments will do more to support growth.

South Africa’s FTSE/JSE Africa All Share Index (JALSH) advanced 0.6 percent, buoyed by commodity exporters including Anglo American Plc and BHP Billiton Ltd.

“Global growth is on a lower trajectory and stimulus measures may bring a rebound in certain sectors that have been under stress,” Gopal Agrawal, chief investment officer at the Indian unit of Mirae Asset Financial Group in Mumbai, said in a telephone interview.

Chile’s IPSA Index gained 0.3 percent as Banco de Chile rose to a two-week high after the Santiago newspaper El Mercurio reported that the country’s largest lender by assets hired McKinsey to advise on commercial strategy.

Hungary’s BUX Index (BUX) of stocks gained 1.5 percent as OTP Bank Nyrt., the nation’s biggest lender, jumped 2 percent. The PX Index in the Czech Republic added 1 percent, while Poland’s WIG 20 Index (WIG20) advanced 0.8 percent.

In China, Citic Securities climbed 3.9 percent, its first advance in a week. Haitong Securities Co. jumped 6.4 percent in Hong Kong. Samsung Electronics, the world’s largest mobile-phone seller, advanced 1 percent to its highest close since Aug. 16. Barclays raised its 2013 operating profit estimates by 8 percent to 36.4 trillion won, according to analysts led by S.C. Bae.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell six basis points to 303, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net;

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.

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