Emerging-Market Stocks Gain on China Manufacturing Data

Emerging-market stocks rose after reports showed expansion in Chinese and Indian manufacturing. The ruble weakened for a third day versus the dollar as Ukraine ended a cease-fire.

The MSCI Emerging Markets Index advanced 0.1 percent to 1,051.39 in New York today after climbing 5.6 percent in the three months through June, the biggest quarterly gain since September 2012. The Shanghai Composite Index (SHCOMP) added 0.1 percent and the yuan strengthened for a fourth day in the longest rally since January. India’s S&P BSE Sensex Index rose to a two-week high. Most Brazilian stocks fell while Dubai equities increased for the first time in four days.

Data today showed China’s manufacturing expanded in June at the fastest pace this year, while a private gauge signaled gains in India. Ukrainian President Petro Poroshenko ended a cease-fire with separatists yesterday, citing more than 100 violations by pro-Russian rebels, and pledged to retake the country’s easternmost regions.

The manufacturing gauge “is mildly supportive for Chinese stocks,” Martial Godet, the head of emerging-market equity and derivatives strategy at BNP Paribas SA in Paris, said by e-mail. “As long as U.S. yields do not start to pick up, EM investors will be comfortable to play the continuation of the rebound of Asian markets.”

The developing-markets gauge has risen 4.9 percent this year and trades at 11 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has gained 5.6 percent and is valued at a multiple of 15.2.

Ukraine Cease-Fire

The ruble dropped 0.9 percent against the central bank’s basket of dollars and euros to the lowest level since June 20. Yields on Ukrainian dollar bonds due 2023 added two basis points to 8.53 percent. The hryvnia weakened 0.6 percent to 11.8250 per dollar.

With the European Union poised to expand sanctions against Russia, Poroshenko ended a truce he called on June 20, rejecting pressure from Ukraine’s bigger neighbor to extend it a second time. The Foreign Ministry said rebels had killed 27 Ukrainian soldiers and wounded 69 in its duration, according to a statement.

The Ibovespa was little changed as a 7.2 percent slump in phone company Oi SA overshadowed an advance by commodities producers including Vale SA, which gained 1.2 percent. The MSCI Brazil/Telecommunication Services Index dropped 2.8 percent to a one-month low.

Chinese Manufacturing

Dubai’s DFM General Index (DFMGI) rebounded 3.2 percent, erasing an earlier slump of as much as 5.4 percent, after mortgage lender Amlak Finance PJSC said it offered creditors a new deal on its defaulted debt. Arabtec Holding Co., the nation’s biggest publicly-traded developer, jumped 10 percent, ending a three-day, 20 percent plunge. Emaar Properties PJSC, which has the biggest weighting on the index and holds 45 percent of Amlak’s shares, rose 5.8 percent to 8.9 dirhams.

The yuan touched a 12-week high while the Shanghai Composite Index climbed to the highest close since June 18. The Chinese Purchasing Managers’ Index was at 51.0, the National Bureau of Statistics and China Federation of Logistics and Purchasing said, matching analysts’ median estimate and climbing from May’s 50.8. A similar index from HSBC Holdings Plc and Markit Economics increased to 50.7 from the previous month’s 49.4. Numbers above 50 signal expansion.

The S&P BSE Sensex Index rose 0.4 percent to its highest close since June 17. Hindalco Industries Ltd. rallied 6.8 percent in Mumbai after CLSA Asia-Pacific Markets forecast the company’s share price will double in four years.

Taiwan’s Taiex Index (TWSE) advanced 0.5 percent to the highest close since November 2007. A manufacturing gauge from HSBC Holdings and Markit today was at 54.

Six out of 10 industry groups in the developing-nation measure gained, led by material stocks. Health-care companies and energy stocks dropped the most.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell six basis points to 263, according to JPMorgan Chase & Co. indexes.

To contact the reporters on this story: Ian Sayson in Manila at isayson@bloomberg.net; Natasha Doff in London at ndoff@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net; Daliah Merzaban at dmerzaban@bloomberg.net Matthew Brown, Marie-France Han

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