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Emerging Stocks Advance to 2-Week High as Bovespa Jumps

Emerging-market stocks rose to a two-week high as Brazil’s Ibovespa surged after manufacturing strengthened in China, the South American country’s top trading partner. South Korea’s won touched the highest level since May.

Iron-ore producer Vale SA advanced to a one-week high and OGX Petroleo e Gas Participacoes SA, the oil company controlled by former billionaire Eike Batista, rallied in Sao Paulo after posting a record plunge Aug. 30. China Railway Construction Corp. (1186) and China Pacific Insurance Group Co. added at least 3.4 percent in Hong Kong. The Borsa Istanbul National 100 Index jumped 3.2 percent while India’s S&P BSE Sensex index gained for a fourth day. Indonesian stocks fell after the country reported a record trade deficit.

The MSCI Emerging Markets Index added 0.9 percent to 938.29 after losing 1.9 percent last month. China’s economy is strengthening after a two-quarter slowdown, with a manufacturing gauge rising to a 16-month high in August. An expansion in euro-area factory output was driven by a resurgence in Italy and Spain. U.S. President Barack Obama delayed action against Syria by seeking approval from Congress, easing concern that an imminent strike would disrupt Middle East oil exports.

“The numbers in China and Europe are encouraging,” Luciano Rostagno, chief strategist at Banco Mizuho do Brasil SA, said in a phone interview from Sao Paulo. “You had a deceleration trend in China, and now we’re starting to see signs that the Chinese economy is stabilizing.”

Chinese Manufacturing

The premium investors demand to own emerging-market government dollar bonds over U.S. Treasuries fell two basis points, or 0.02 percentage point, to 355 basis points, according to JPMorgan Chase & Co. indexes.

The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong surged 2.3 percent, the most in almost three weeks. An official Purchasing Managers’ Index climbed to 51 in August from 50.3 in July, a government report showed yesterday.

A separate PMI released today by HSBC Holdings Plc and Markit Economics advanced to 50.1 last month from 47.7 in July, the largest gain since 2010. Readings above 50 signal expansion.

A euro-area index based on a survey of purchasing managers in the manufacturing industry increased to a 26-month high of 51.4 from 50.3 in July, London-based Markit Economics said today. That’s above an initial estimate of 51.3 published on Aug. 22. Manufacturing gauges for the Czech Republic, Hungary, Poland, South Africa and Turkey exceeded 50, the level indicating growth.

Copper Gains

The Ibovespa gained 3.7 percent, the most since July 2012, as Vale, whose top export market is China, rose 3 percent.

OGX surged 33 percent after sinking 63 percent last week. The stock’s weighting on the Ibovespa increased today to 5.48 percent from 0.92 percent on Aug. 30 after the rebalancing the exchange carries out every four months, data compiled by Bloomberg show.

Billionaire Carlos Slim’s Minera Frisco SAB dropped 1.4 percent. The country’s exchange has canceled some erroneous trades that caused the shares to double in price on Aug. 30, according to a bourse official with direct knowledge of the decision.

Coca-Cola Femsa SAB, the largest bottler of the soft drink in Latin America, rose 4.3 percent, snapping a record losing streak after saying it will buy Brazil’s Spaipa SA Industria Brasileira de Bebidas for $1.86 billion.

OAO Mechel, Russia’s biggest producer of coal for steelmakers, and KGHM Polska Miedz SA, Poland’s copper producer, snapped four-day slumps as industrial metals rose. Mechel advanced 0.8 percent in Moscow and KGHM surged 4.7 percent in Warsaw. Copper rose the most in three weeks. China is the world’s biggest consumer of the metal.

South Africa

Turkey’s benchmark equity gauge climbed the most since June 26, while the lira gained the most in a month against the dollar.

South Africa’s FTSE/JSE Africa All Share Index advanced 1.2 percent as the country’s PMI unexpectedly rose to a six-year high.

All 10 industry groups in MSCI’s emerging-markets index advanced, led by material companies. The broad measure has lost 11 percent this year, compared with an 11 percent increase in the MSCI World Index of developed-nation shares. The developing-nation index trades at 10.2 times projected 12-month earnings, lower than the MSCI World’s 13.5 times, data compiled by Bloomberg show.

China Railway Construction climbed the most since July 23 after reporting a 47 percent jump in first-half profit. Kweichow Moutai Co., China’s biggest liquor maker by market value, plunged 10 percent in Shanghai after the company’s profit trailed estimates.

Everbright Securities Co. slumped 8.5 percent after it drew a record penalty and two executives resigned.

India Slowdown

The Sensex increased 1.4 percent as lower oil prices offset India’s slowest economic expansion in four years. The country imports 80 percent of its oil requirements. ICICI Bank Ltd. (ICICIBC), the country’s second-biggest lender, rose 2.8 percent in Mumbai. The rupee slipped 0.5 percent.

The won advanced to the strongest level since May after South Korea reported a trade surplus that was double what economists predicted.

The Jakarta Composite Index fell 2.2 percent, the biggest decliner in Asia, and the rupiah weakened to the lowest level in more than four years after the country reported a record trade deficit for July.

PT Indofood Sukses Makmur tumbled 9.2 percent in Jakarta, the most since September 2011. The company, the largest shareholder of China Minzhong Food Corp., offered S$488 million ($383 million) cash for the rest of the vegetable processor that had slumped after a short-seller’s allegations. Minzhong shares more than doubled after resuming trade in Singapore today.

To contact the reporters on this story: Maria Levitov in London at mlevitov@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net

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

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