Emerging Stocks Rise Most in 2 Weeks on China Data; Rupee Gains

Emerging-market stocks gained the most in two weeks after a gauge of Chinese services industries rose. India’s rupee led advances in currencies and the Philippine peso appreciated after a credit-rating upgrade.

More than four stocks climbed for every one that dropped on the MSCI Emerging Markets Index, which added 1 percent, the most since Sept. 19, to 1,007.31 as of 1:42 p.m. in London. Benchmark measures in Turkey (XU100) and India increased more than 1 percent, while China Unicom (Hong Kong) Ltd. and China Telecom Corp. jumped at least 7 percent in Hong Kong after a report said the government may cut mobile interconnection fees. The rupee and the peso strengthened the most in two weeks.

The developing-nation gauge increased for a third day on bets the U.S. budget impasse may lead the Federal Reserve to maintain monetary stimulus, spurring investor appetite for riskier assets. House Speaker John Boehner said President Barack Obama refused to negotiate in a meeting with top congressional leaders about the government shutdown. China’s non-manufacturing index increased to the highest level since March last month.

“A long-term U.S. shutdown or even a technical default is not priced or even considered for the time being,” Michael Ganske, the head of emerging markets at Rogge Global Partners Plc in London, said by e-mail. “Emerging markets are doing well on the back of strong service PMI in China, Philippines upgrade to investment grade” by Moody’s Investors Service.

All 10 industry groups in the MSCI Emerging Markets Index climbed, with technology, health care and financial companies adding more than 1 percent. Stock exchanges in China and South Korea are closed for holidays.

Chinese Services

The Chinese services index increased to 55.4 in September from 53.9 in August, the Beijing-based National Bureau of Statistics and Federation of Logistics and Purchasing said today. The level of 50 indicates an expansion, adding to signs that the world’s second-biggest economy will sustain a rebound after a two-quarter slowdown.

The S&P BSE Sensex Index jumped 2 percent in Mumbai, the most in two weeks, as materials producers and consumer companies climbed amid speculation a strengthening rupee will lure foreign investors. The Indian currency appreciated 1.2 percent to 61.74 to the dollar, the biggest advance among 24 emerging-market peers monitored by Bloomberg.

Turkiye Garanti (GARAN) Bankasi AS, the largest Turkish lender by market value, led gains on the Borsa Istanbul National 100 Index, which rose 1.1 percent. Garanti climbed 1.3 percent after slumping 4.1 percent to the lowest level since Sept. 13 yesterday. The government is selling $1.25 billion of five-year Islamic bonds today, according to a person with direct knowledge of the transaction, who asked not to be identified because the information is private.

Value ‘Pockets’

The MSCI Emerging Markets Index has lost 4.6 percent this year, compared with a 16 percent gain in the MSCI World Index of developed-nation shares. The developing-country gauge trades at 10.5 times projected 12-month earnings, below the 13.9 multiple for the MSCI World, data compiled by Bloomberg show.

“There is a window of opportunity for global emerging markets to stage a rebound after a challenging few months,” Benoit Anne, the head of emerging-markets strategy at Societe Generale SA in London, said by e-mail. “I particularly like EM fixed income, where I think there are some interesting pockets of value. Russia OFZ is a good example,” he said, referring to the ruble-denominated government bonds.

The yield on Russian securities due in January 2023, which fell 5 basis points to 7.26 percent today, is up 78 basis points since its 2013 low in May.

Moody’s Ratings

The Philippine peso advanced the most since Sept. 19 after Moody’s raised the nation by one level to Baa3, the lowest investment grade, with a positive outlook. The country won investment-grade credit scores from Standard & Poor’s and Fitch Ratings earlier this year.

Moody’s lowered Brazil’s rating outlook to stable from positive, citing deteriorating debt and investment ratios and evidence the economy is going through a lower-growth period. The yield on the country’s dollar bonds due January 2023 rose four basis points, or 0.04 percentage point, to 4.29 percent.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong (HSCEI) advanced 1.8 percent, the most since Sept. 9. Unicom, the nation’s second-largest mobile carrier, jumped the most since August 2011 and China Telecom posted its biggest rally since 2008. The companies may see their interconnection fees for calls through China Mobile Ltd. halved, the Economy & Nation Weekly reported today, citing a person it didn’t identify.

To contact the reporters on this story: Maria Levitov in London at mlevitov@bloomberg.net; Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net; Richard Frost at rfrost4@bloomberg.net

9:49

Oct. 3 (Bloomberg) -- Jim Walker, managing director and founder at researcher Asianomics Ltd. in Hong Kong, talks about the economic outlook for the U.S. and Asian countries including Japan and China. He speaks with Susan Li and Rishaad Salamat on Bloomberg Television's "Asia Edge." (Source: Bloomberg)

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