Emerging-market stocks rose for a second day, paring a weekly drop, as exporters rallied amid optimism about U.S. economic growth. South Korea’s won and the Philippine peso advanced.
The MSCI Emerging Markets Index climbed 0.7 percent to 935.99 as of 2:10 p.m. in Hong Kong. The measure has fallen 0.1 percent this week, poised for a third weekly loss. Taiwan Semiconductor Manufacturing Co. (2330) posted its largest two-day gain since November in Taipei, while Catcher Technology Co. rallied to the highest level since March 2012. The won and peso added at least 0.2 percent versus the dollar. China’s Shanghai Composite Index erased earlier losses as mainland markets resumed trading after a week-long holiday.
Developing-nation stocks are rebounding before a U.S. employment report expected to signal further improvement in the world’s largest economy after data yesterday showed U.S. jobless claims dropped for the first time in three weeks.
“The stocks are rebounding after being rattled the past one week,” Debasish Mallick, chief executive officer at IDBI Mutual Fund in Mumbai, said by telephone today. “There are expectations the U.S. economic data will show signs of improvement. Volatility will continue to remain high.”
All 10 industry groups in the emerging markets gauge rose, led by technology companies. Taiwan Semiconductor, the world’s largest custom maker of chips, rose 3.5 percent in two days after a two-day, 6.9 percent slump.
Catcher, an Apple Inc. supplier, surged 5.8 percent after brokerages including BNP Paribas SA and Goldman Sachs Group Inc. raised their share-price estimates. The Taiex Index (TWSE) climbed 0.9 percent, the most since Dec. 30. South Korea’s Kospi index added 0.8 percent as Samsung Electronics Co. jumped 1.3 percent.
The MSCI Emerging Markets Index has dropped 11 percent from an Oct. 22 high as China’s economy slows, weak currencies from India to Turkey spur central banks to raise interest rates and the U.S. Federal Reserve pushes ahead with plans to reduce monetary stimulus. Investors removed $6.4 billion from developing-nation equities in the week through Feb. 5, the biggest outflow since August 2010, according to Citigroup Inc., citing data from EPFR Global.
The selloff in developing economies probably isn’t over as sentiment remains negative, Templeton Emerging Markets Group’s Mark Mobius said in an interview.
“The negative sentiment is pretty much in place so you can expect a lot more selling,” Mobius, who oversees more than $50 billion in developing nations as an executive chairman at Templeton, said in an interview from Rio de Janeiro today. “We are looking but actually not buying at this stage. Prices can come down or take time to stabilize.”
China’s policy shifts are a bigger driver of the selloff in emerging markets than the Federal Reserve’s decision to dial back stimulus, according to Philip Moffitt, head of fixed income in Sydney for Asia and the Pacific at Goldman Sachs Asset Management. (GS)
The Shanghai Composite Index climbed 0.2 percent after falling as much as 0.9 percent as technology shares rallied. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong rose 0.8 percent, its second day of gains after touching the lowest level in six months on Feb. 5.
The Philippine Stock Exchange Index jumped 1.6 percent, led by gains in Philippine Long Distance Telephone Co. Gauges in Thailand and Indonesia climbed at least 0.6 percent.
The S&P BSE Sensex of Indian shares rose 0.4 percent as Tata Power Co., the nation’s biggest non-state generator, increased 1.6 percent before its earnings today.
The won advanced to the strongest level since Jan. 29, while the rupiah climbed to a two-week high. The peso gained to a three-week high after the Philippine central bank signaled it’s closer to raising borrowing costs amid the fastest inflation in two years.
To contact the reporter on this story: Santanu Chakraborty in Mumbai at firstname.lastname@example.org