Emerging-market stocks posted a third straight weekly gain as a rally in Indian shares offset concern China’s slowdown is deepening. The rupee rose as the main opposition bloc swept to power with the biggest win in 30 years.
India’s benchmark index (SHCOMP) rose to a record, led by ICICI Bank Ltd. (ICICIBC) The Ibovespa rose as Centrais Eletricas Brasileiras SA led a rally among Brazilian utilities after reversing its losses in the first quarter. China’s small-company stocks sank, dragging the benchmark gauge down more than 20 percent from its February peak.
The MSCI Emerging Markets Index rose 0.3 percent to 1,032.57, extending its gain this week to 2.5 percent. Narendra Modi declared a new era in India as his opposition bloc secured the biggest election win in 30 years, having vowed to revive economic growth. A report showed Chinese banks had the biggest quarterly increase in bad loans since 2005 as a slowdown caused defaults to rise.
“Modi is renowned for corporate governance,” Raj Kothari, a London-based fixed-income trader dealing in emerging-markets assets at Sun Global Investment Ltd., said by phone. “His win will create a lot of inflows, and we expect to see the further appreciation in the rupee. Modi will likely be here for 5-to-10 years.”
The developing-nation gauge has gained 3 percent this year and trades at 10.7 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index (BUX) has risen 1.5 percent in 2014 and is valued at 14.2 times.
The S&P BSE Sensex rose 0.9 percent to after earlier surging 6.2 percent. Global funds bought a net 36.3 billion rupees of Indian stocks today, the highest single-day inflow since March 21, according to provisional data from the exchanges. The Bank of New York Mellon India ADR Index gained 2.5 percent after the close of trading in Mumbai.
The Bharatiya Janata Party and its allies won or were leading in about 340 of 543 seats up for grabs, more than the 272 needed for a majority, Election Commission data showed. Rahul Gandhi, who led the Congress campaign, conceded defeat.
The value of Indian equities has climbed by $332 billion since the BJP named Narendra Modi as its candidate for prime minister on Sept. 13. Foreign investors poured $14.4 billion into the nation’s shares during the period, while bullish wagers in the options market outnumbered bearish bets by the widest margin in 14 months, amid speculation Modi will do more than the ruling Congress Party to revive economic growth.
The Ibovespa rose 0.2 percent. Eletrobras, as Eletricas Brasileiras is known, rallied 2.4 percent.
The forint strengthened 0.4 percent, paring a 1 percent decline yesterday, as Adam Balog, vice-president at the central bank, told Magyar Nemzet newspaper it was hard to determine how much longer would Hungary’s easing cycle continue as the current 10 basis-point rate cuts aren’t having a substantial impact on inflation. The BUX Index in Budapest rose 1.1 percent.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slipped 0.2 percent, paring its weekly gain to 2.8 percent. The ChiNext index lost 2.2 percent in Shenzhen, pushing its drop from a record high on Feb. 17 to 21 percent. The Shanghai Composite Index added 0.1 percent.
Non-performing loans rose by 54 billion yuan ($8.7 billion) in the three months through March to 646.1 billion yuan, the highest level since September 2008, according to data released by the China Banking Regulatory Commission yesterday.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell 0.02 percentage point to 283 basis points, according to JPMorgan Chase & Co. indexes.