Most Emerging Stocks Rise on China While Rupiah Tumbles

Most emerging-market stocks advanced, led by industrial and technology companies, amid speculation China’s economy is stabilizing. Indonesia’s rupiah retreated to the weakest level in more than four years.

The MSCI Emerging Markets Index was little changed at 932.78 as 412 stocks rose, while 344 fell. Citic Securities Co. paced gains in Chinese brokerages after the Shanghai Stock Exchange said it is considering a change in settlement rules. Russia’s Micex Index erased an earlier rally as the nation cut its 2013 growth forecast. The rupiah declined amid concern policy makers’ steps to boost dollar supply are insufficient.

Credit Suisse Group AG and Deutsche Bank AG increased their economic forecasts for China in the past week as data from manufacturing to exports indicated the world’s second-biggest economy is strengthening after a two-quarter slowdown. Concern that tension between the U.S. and Syria will escalate grew after Secretary of State John Kerry said President Barack Obama will hold Syria’s government accountable for using chemical weapons.

“The transition in the type of growth, from construction and industrial to more domestic demand, is a pretty massive shift, and I’m amazed China is beginning to pull that off,” said Doug Ramsey, the Minneapolis-based chief investment officer of Leuthold Group LLC, whose firm oversees $1.7 billion. He spoke in a phone interview. “Just given the values that have been created, I think emerging-market stocks are going to be winners in the next market up-cycle.”

Emerging ETF

The gauge of developing nations is trading at 9.9 times estimated earnings, below the valuation of developed markets of 13.7. The iShares MSCI Emerging Markets Index exchange-traded fund dropped 1.1 percent to $38.23. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, jumped 8.7 percent to 25.25.

Brazil’s Ibovespa declined as Rossi Residencial SA led declines in homebuilders. The real weakened 1.3 percent on speculation that the central bank’s $60 billion program may be insufficient to stem the currency’s slide.

The Micex Index (INDEXCF) dropped 0.4 percent in Moscow, erasing an earlier advance of as much as 0.8 percent. Russia reduced this year’s growth estimate to 1.8 percent from 2.4 percent, Deputy Economy Minister Andrey Klepach said by phone today. OAO Uralkali tumbled after the company’s chief executive officer was detained in Belarus.

The Borsa Istanbul National 100 Index snapped a five-day slump as Turkiye Garanti Bankasi AS and Akbank TAS added more than 2 percent. The Turkish lira touched the weakest level on record as the central bank provided funds to banks at its benchmark 4.5 percent rate for the first time in six days.

Chinese Stocks

The Shanghai Composite Index rose 1.9 percent. Citic Securities and Haitong Securities Co. jumped more than 5 percent after the Shanghai Stock Exchange said it is considering a change in settlement rules that would allow investors to buy and sell a stock on the same day.

Most Indian stocks rose as producers of capital goods and software companies advanced. Bharat Heavy Electricals Ltd. (BHEL) rallied for the fourth day, helping a gauge of machinery producers to its biggest three-day climb in about two months. The rupee fell the most in a week on concern slowing economic growth will make it tougher to attract investment as the U.S. prepares to rein in stimulus.

The rupiah slid 0.6 percent to 10,848 per dollar as of 4 p.m. in Jakarta, after earlier reaching 10,883, the weakest level since April 2009, according to prices from local banks.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose 0.02 percentage point to 347 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Andras Gergely in Budapest at agergely@bloomberg.net; Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net

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