Emerging Stocks Rise to Seven-Month High on China Economic Data

Emerging-market stocks advanced for a fourth day, sending the benchmark index to a seven-month high, after better-than-estimated Chinese industrial production and retail sales added to signs the global economy is strengthening.

Cnooc Ltd. (883), a state-owned Chinese offshore energy explorer, climbed to the highest level since May after Canada approved its $15.1 billion takeover of Nexen Inc. Cia. de Bebidas das Americas led gains on the emerging markets gauge as the Brazilian unit of Anheuser-Busch InBev NV considers a proposal to convert all shares into voting shares. OAO GMK Norilsk Nickel, the world’s largest producer of the metal, advanced to a five-month peak in Moscow as metals rose.

The MSCI Emerging Markets Index added 0.5 percent to 1,029.06 in New York, the highest level since May 2. China’s factory production and retail sales rose last month at the fastest pace since March, reports showed yesterday. Electricity output accelerated in November, according to government data, while the inflation rate of 2 percent was lower than estimated.

“China is a glimmer of economic optimism,” Mark Luschini, chief investment strategist Janney Montgomery Scott LLC in Philadelphia, which manages about $54 billion, said by phone. “The evidence that’s accumulated only validates the outlook that China is stabilizing. Now the question is: is it stabilizing or reaccelerating somewhat?”

Chinese Stocks

China’s stocks gained the most among major emerging markets as the Shanghai Composite Index (SHCOMP) advanced 1.1 percent to a one- month high, with trading volumes 86 percent above its 30-day average, data compiled by Bloomberg show. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong gained for a fifth day, rising 0.7 percent. Brazil’s Bovespa index added 1.3 percent while Turkey’s benchmark stock index climbed 0.7 percent.

Russia’s Micex Index rose 0.4 percent, a fourth day of gains. Russia’s central bank unexpectedly raised its overnight deposit rate and cut the cost of ruble currency swaps to curb money-market volatility. The ruble strengthened 0.6 percent to 30.72 against the dollar.

The Egyptian pound weakened 0.3 percent to the lowest since December 2004 as opponents of President Mohamed Mursi vowed to keep up protests against a draft constitution. South Korea’s won gained 0.2 percent to the highest level since September 2011.

All 10 industry groups in the MSCI Emerging Markets Index (MXEF) rose, led by a 0.9 percent gain in materials companies. The overall index has risen 12 percent this year, matching the 12 percent gain in the MSCI World Index (MXWO) of developed countries. The emerging-markets gauge trades at 11.9 times estimated profit, compared with the MSCI World’s 13.6, according to data compiled by Bloomberg.

China Output

Industrial production in China, the world’s biggest emerging market, climbed 10.1 percent last month, while retail sales grew 14.9 percent, the statistics bureau said yesterday. Economists in a Bloomberg survey had a median estimate of 9.8 percent growth in industrial production and a 14.6 percent increase in retail sales. Electricity output accelerated in November, according to government data.

“Good data out of China is adding to signs that the growth trajectory has stabilized,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London, said by phone. “China is key for global growth.”

Xi Jinping visited the southern province of Guangdong in his first trip since taking over the Communist Party, drawing parallels to a 1992 tour by leader Deng Xiaoping that spurred economic opening.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries narrowed six basis points, or 0.06 percentage points, to 276 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

Fiscal Cliff

President Barack Obama said he is ready to make a deal with Republicans as he promoted his plan to avert the so-called fiscal cliff at a Michigan factory visit. Obama and House Speaker John Boehner met yesterday at the White House to discuss the dispute over the U.S. budget, representatives for the two leaders said. An agreement would help avert the fiscal cliff, which could result in more than $600 billion in tax increases and spending cuts taking effect next month.

The 21 countries in the MSCI emerging-market index send about 17 percent of their exports to the U.S., according to data compiled by the World Trade Organization.

Monti Resignation

Italian Prime Minister Mario Monti said he lost support in Parliament and will resign, sparking concern a leadership change will disrupt efforts to reduce debt. His resignation announcement comes before a Dec. 13-14 summit of European Union leaders to debate a road map for the overhaul of the euro area.

Cnooc climbed 1.1 percent to its highest close since May 2 in Hong Kong. Its takeover of Nexen is the largest-ever foreign acquisition by a Chinese company.

Dongfang Electric Corp. Ltd. (1072) jumped 10 percent, the most since April 2010, as China’s electricity production increased the most since February, government data showed.

Norilsk Nickel advanced 1.5 percent. The Standard & Poor’s GSCI gauge of 24 raw materials slipped 0.2 percent.

OAO RusHydro (INDEXCF), Russia’s biggest renewable energy producer, gained 3.4 percent, the most since Nov. 22. Russian Deputy Prime Minister Arkady Dvorkovich may attend the company’s board meeting to control the decision on the extension of an additional share issue as part of a government plan, Kommersant newspaper reported today, citing unidentified sources.

Banvit Bandirma Vitaminli Yem Sanayii AS (BANVT), a Turkish poultry producer, rose the most since January, as Goldman Sachs Group Inc. recommended buying the stock and raised its price target.

AmBev Rally

AmBev, as Cia. de Bebidas das Americas is known, surged 11 percent to a record. OGX Petroleo & Gas Participacoes SA, billionaire Eike Batista’s oil-producing company, led the Bovespa higher after a columnist for Brazilian magazine Veja reported the billionaire is in talks to sell stakes in his units to Brazil’s National Development Bank.

Samsung Electronics Co. (005930) added 0.7 percent to a record close in Seoul. HI Investment & Securities Co. raised its share-price estimate to 1.8 million won ($1,668) from 1.6 million won, citing a stronger earnings outlook and declining risks related to a legal battle with Apple Inc.

Axiata Group Bhd. (AXIATA), Malaysia’s biggest mobile-phone operator by market value, climbed 3.5 percent in Kuala Lumpur to its highest close since Nov. 1. Investors should switch to Axiata from Telekom Malaysia Bhd. (T), which faces “cost headwinds” and rising competition in broadband, according to a report by CIMB Group Holdings Bhd.

To contact the reporters on this story: Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net; Maria Levitov in London at mlevitov@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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