Emerging Stocks Rise to Three-Week High on Record China Lending

Emerging-market stocks climbed to the highest level in more than three weeks, led by industrial and financial companies, as record Chinese lending bolstered prospects for growth in the world’s second-largest economy.

China Life Insurance Co. (2628) contributed most to gains in the Hang Seng China Enterprises Index after UBS AG and Credit Suisse Group AG raised their ratings on the stock. OAO Gazprom propelled Russia’s Micex Index to an eight-week high as oil rose for the first time in three days. The Philippine peso approached its 2014 high, while Indonesia’s rupiah rose to the strongest in three months. BR Malls Participacoes led real estate stocks lower in Brazil after analysts cut their growth estimates for Latin America’s largest economy.

The MSCI Emerging Markets Index added 0.7 percent to 964.29 in New York, the highest level since Jan. 22. Aggregate financing, China’s broadest measure of credit, reached 2.58 trillion yuan ($425 billion), while new local-currency lending climbed to the strongest level since 2010, the central bank said on Feb. 15.

“Chinese data on new loans surpassed all expectations,” Slava Smolyaninov, the chief strategist at UralSib Capital LLC in Moscow, said by e-mail. “As long as the biggest EM is doing OK, most emerging markets along with currencies look supported.”

All 10 industry groups in the developing-nation measure advanced, led by a 1.2 percent increase in the gauge of industrial companies and a 1 percent gain in financial shares. A Bloomberg index tracking 20 emerging-market currencies strengthened for a fifth day.

Chinese Lending

The gain today trimmed this year’s drop in the MSCI emerging-markets gauge to 3.8 percent and took its valuation to 9.4 times projected 12-month earnings. That compares with a multiple of 14.8 for the MSCI World Index, which is down 0.5 percent in 2014, data compiled by Bloomberg show.

The Chinese loan data buoyed commodities from oil to copper. Along with better-than-expected trade data in January, the credit figures helped the Shanghai Composite Index (SHCOMP) erase a slump of as much as 5.9 percent this year. Aggregate financing exceeded the 1.9 trillion-yuan median estimate in a Bloomberg News survey. M2, the broadest measure of money supply, grew 13.2 percent, according to the central bank.

China Life, the nation’s biggest insurer, jumped 5.8 percent in Hong Kong, the most since Nov. 18. The stock was upgraded to outperform at Credit Suisse, while UBS raised its rating to buy.

Kazakhstan, Qatar

OAO Sberbank rallied 0.8 percent in Moscow, while Gazprom, the natural-gas export monopoly, advanced 1.5 percent. The Micex rose 0.8 percent to the highest level since Dec. 23. Gold and silver miner Polymetal International Plc added 4.3 percent as bullion increased to the highest level in more than three months.

BR Malls fell 4.7 percent in Sao Paulo as the Ibovespa declined after economists surveyed by the central bank cut their growth estimates for the country for 2014 and 2015.

Mexico’s peso gained 0.2 percent, while Peru’s sol added 0.1 percent.

West Texas Intermediate crude climbed 0.6 percent to $100.92 a barrel in New York.

The Kazakhstan Stock Exchange Index (KZKAK) jumped 2.2 percent to a one-year high after data showed the nation’s economic growth accelerated to 6 percent in 2013 from 5 percent in 2012. The country’s central bank devalued the tenge last week, supporting shares of Kazakhmys Plc, a copper producer, and sending the main index up 13 percent.

Qatar’s stock index climbed 1.5 percent to the highest level since July 2008. Industries Qatar QSC announced a 42 percent increase in its dividend payout, helping boost the stock by 7.4 percent. The Borsa Istanbul 100 Index added 1.1 percent, while the FTSE/JSE Africa All Shares Index increased 0.9 percent.

Indonesian Inflows

The rand gained 0.3 percent versus the dollar, while currencies in Thailand and South Korea appreciated at least 0.3 percent. The rupiah climbed to the highest level in three months, as global investors bought the nation’s assets after its current-account deficit narrowed.

Overseas funds added 3.37 trillion rupiah ($286 million) to holdings of local-currency sovereign debt this month through Feb. 11, and bought a net $186 million of Indonesian stocks in February through last week. The Philippine peso rose to the strongest level since Jan. 2.

The Hang Seng China Enterprises gauge advanced 1.7 percent and the Shanghai Composite Index added 0.9 percent, after surging 3.5 percent last week, the most since September.

The S&P BSE Sensex of Indian shares climbed 0.5 percent. Prime Minister Manmohan Singh’s government pledged to reduce the deficit to the lowest in seven years in an interim budget before elections due by May.

GS Engineering & Construction Corp. (006360) paced a rally among South Korean builders, soaring 11 percent. Current indicators are boosting expectations that South Korean property prices will rise further, providing positive momentum to construction companies, Tongyang Securities Inc. said in a report today.

To contact the reporters on this story: Maria Levitov in London at mlevitov@bloomberg.net; Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net; Michael Patterson at mpatterson10@bloomberg.net

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