Emerging-market stocks advanced the most in two months after China pledged to boost private investment as part of economic policy changes. South Korea’s won climbed as foreign investors became net buyers of shares.
The MSCI Emerging Markets Index added 1.4 percent to 1,005.17, erasing its decline for the week. The iShares China Large-Cap ETF (FXI) rallied 4.4 percent. Mexico’s IPC index increased the most among major equity gauges in the Americas as mining company Industrias Penoles SAB surged 3.1 percent. The won paced gains in currencies as overseas investors pumped money into local stocks for the first time in two weeks. Financial markets in Brazil and India are closed for holidays.
China pledged the most sweeping changes since the 1990s to the Communist Party’s policies, vowing to ease the one-child policy, expand farmers’ land rights and allow more private investment in state industries. The document, covering 60 measures, fleshes out a communique issued Nov. 12 after a four-day party conclave. The nation is seeking to balance finding new sources of growth with sustaining the party’s grip on power as President Xi Jinping faces challenges from debt to demographics.
“Many things are coming together that are making people feel more optimistic about China,” Paul Zemsky, the New York-based head of asset allocation at ING Investment Management which oversees $190 billion, said by phone. “There were a lot of concerns about China’s ability to sustain growth over the next 10 or 15 years.”
All 10 groups in the MSCI Emerging Markets Index gained today, led by industrial and financial shares. The broad measure advanced 1 percent for the week, trimming this year’s decline to 4.7 percent.
The iShares MSCI Emerging Markets Index exchange-traded fund climbed 1.9 percent to $42.25. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rallied 3.5 percent to 21.74.
The Shanghai Composite Index (SHCOMP) rose 1.7 percent and the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rallied 3 percent amid speculation about reforms before a report by the official Xinhua News Agency detailing the changes. Citic Securities Co. (600030) and Haitong Securities Co. led a rally in brokerages. Yields on the nation’s 10-year notes increased to the highest level since 2007 and the benchmark money-market rate rose the most in five months.
South Korea’s Kospi Index jumped the most in four months as Samsung Electronics Co. (005930) climbed 2.7 percent. The company plans to release a Galaxy smartphone next year with a three-sided display that wraps around the edges so users can read messages while looking from an angle, two people familiar with the plans said yesterday.
Mexico’s IPC index advanced 1.8 percent as Penoles posted the biggest increase in two months.
Russian stocks gained for a second day as commodity producers rallied on bets the Federal Reserve’s next chairman will continue stimulus efforts, spurring appetite for riskier assets. OAO Mechel, the nation’s biggest coking coal producer, climbed 11 percent, trimming its weekly slump to 30 percent. Benchmark gauges in Poland, Hungary and Turkey also advanced.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 334 basis points, according to JPMorgan Chase & Co.
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