Emerging Stocks Climb to Six-Month High; Baht Drops on Army Coup

Emerging-market stocks rose to a six-month high as an improvement in China’s manufacturing added to signs that the world’s second-biggest economy is stabilizing. Thailand’s baht dropped as the army staged a coup.

A Chinese gauge of Hong Kong-traded shares surged to a five-week high as China Gas Holdings Ltd. (384) jumped 6 percent. South Africa’s benchmark measure crossed the 50,000 mark for the first time. The baht slid 0.3 percent today as the army took control of the country and suspended its constitution. Mining company Vale SA led a gain in Brazilian stocks as metal prices rose.

The MSCI Emerging Markets Index (JALSH) added 0.9 percent to 1,041.29. A Chinese manufacturing gauge rose to a five-month high in May, signaling a recovery after government moves to counter an economic slowdown. Federal Reserve policy makers said yesterday that continued monetary stimulus doesn’t risk sparking a jump in the inflation rate.

“The main driver in emerging markets today is better-than-expected China PMI,” Nick Paulson-Ellis, co-head of global emerging markets at Espirito Santo Investment Bank in London, said by e-mail.

The developing-markets gauge has increased 3.8 percent this year and trades at 10.8 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index of developed countries has advanced 2.1 percent in 2014 and is valued at a multiple of 14.2.

Thailand Coup

Thai army chief Prayuth Chan-Ocha said in a live television broadcast that meetings were being organized with the members of political parties and protest groups in Bangkok to discuss a resolution to the country’s political crisis, two days after declaring a martial law.

The FTSE/JSE Africa All Share Index (ADSMI) rose 0.5 percent in Johannesburg after China’s better-than-estimated PMI data. The Asian nation is South Africa’s biggest trading partner, accounting for 14 percent of exports in 2013, according to government data. The rand gained 0.4 percent.

Abu Dhabi’s ADX General Index jumped 2 percent. India granted a banking license to National Bank of Abu Dhabi PJSC, according to three people familiar with the matter, the first in Asia’s third-biggest economy since 1980 for a United Arab Emirates-based lender.

The PX Index (PX) in the Czech Republic added 0.6 percent and Hungary’s BUX Index (BUX) increased 1.1 percent. Hungary-based Wizz Air Ltd., Eastern Europe’s biggest budget carrier, said it is seeking to raise about 200 million euros in an initial public offering in London by June.

China Stocks

All 10 industry groups in the MSCI Emerging Markets Index gained, led by health-care and utility companies.

Vale gained 1.7 percent, contributing the most to the Ibovespa’s 1.2 percent advance.

The Hang Seng China Enterprises Index (HSCEI) climbed 1.1 percent, its second day of gains. The Shanghai Composite Index fell 0.2 percent. The preliminary purchasing managers’ index from HSBC Holdings Plc and Markit Economics was at 49.7, exceeding the 48.3 median estimate of analysts surveyed by Bloomberg News and a final reading of 48.1 in April. A reading below 50 signals contraction.

China Gas rallied the most since November as the government signed a $400 billion natural-gas supply accord with Russia. China Resources Gas Group Ltd. (1193) advanced 3.9 percent. PetroChina Co., the country’s biggest oil and gas producer, added 1.8 percent.

Gas Contract

Russia will supply natural gas to China through a new pipeline over 30 years. China National Petroleum Corp., PetroChina’s state-owned parent and Russia’s OAO Gazprom signed the agreement yesterday. The ruble gained for a fifth day against the central bank’s target euro-dollar basket, approaching a four-month high and prompting the central bank to cut interventions aimed at smoothing currency swings. The Micex (INDEXCF) Index in Moscow fell 1 percent, retreating from the highest level since Feb. 28.

India’s S&P BSE Sensex (SENSEX) index climbed 0.3, while the rupee ended a two-day decline.

The premium investors demand to own emerging-market debt over U.S. Treasuries was little changed at 281 basis points, according to JPMorgan Chase & Co. indexes.

To contact the reporters on this story: Natasha Doff in London at ndoff@bloomberg.net; Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net Ash Kumar, Richard Richtmyer

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