Emerging Stocks Rise on China Outlook as Russia’s Ruble Declines

Aug. 15 (Bloomberg) -- Citi Private Bank Global Chief Strategist Steven Wieting discusses global crises and the risks to the markets on “Bloomberg Surveillance.” (Source: Bloomberg)

Emerging-market stocks posted a weekly gain amid speculation China will take steps to support the economy. The ruble fell as Ukraine said it attacked an armed convoy that crossed the border from Russian territory.

China Mobile Ltd. (941) added the most since 2009 after saying it will cut device subsidies. The Shanghai Composite Index (SHCOMP) posted its longest weekly winning streak in 14 months. Katmerciler Arac Ustu Ekipman Sanayi ve Ticaret AS surged 18 percent in Istanbul after the truckmaker swung to a profit. The Ibovespa rallied the most in a month on speculation Brazilian President Dilma Rousseff will lose her re-election bid.

The MSCI Emerging Markets Index rose 0.3 percent to 1,075.56, pushing the weekly increase to 2.9 percent. Chinese data showed inflation was subdued last month, while weaker-than-estimated credit growth and industrial production boosted speculation the government will ease monetary policy. The Market Vectors Russia ETF erased gains in New York and the ruble extended declines as Ukraine said its troops had destroyed part of an armed Russian convoy.

“Anytime there’s a threat of a shooting war, it produces weakness in equities,” Walter “Bucky” Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama, which oversees $17 billion, said by phone. “If Ukraine and Russia are shooting at each other, that’s negative for developed and emerging markets. We have to wait and see to determine exactly what’s happening. But for now, it’s on the downside.”

Weekly Gains

A Bloomberg gauge tracking 20 emerging-market currencies fell 0.1 percent, paring its gain this week to 0.4 percent. The premium investors demand to own developing-country debt over U.S. Treasuries increased three basis points to 289, according to JPMorgan Chase & Co. indexes.

Nine of 10 industry groups in the emerging-markets measure rose, led by telecommunications companies. China Mobile, the world’s largest carrier by users, jumped 5.8 percent. Credit Suisse Group AG and Barclays Plc boosted the stock’s ratings after the company said it will cut $2 billion from its device subsidies this year.

The Market Vectors Russia ETF fell 0.9 percent. The ruble dropped 0.7 percent to 36.1858 per dollar. The Micex added 0.7 percent in Moscow before Ukraine said it attacked the convoy.

The Ibovespa gained 2.1 percent, the biggest advance among the world’s major equity benchmarks. Brazilian stocks rose a second day on speculation Marina Silva will run as a candidate in the October presidential election, dimming Rousseff’s prospects.

The BUX Index in Hungary added 0.5 percent. In Istanbul, Katmerciler, which makes anti-riot vehicles and water-cannon armed trucks, surged as volume jumped to 13 times the three-month daily average. The company turned to a profit after boosting its focus on export markets from Sudan to Kurdistan.

China Policy

The developing-nation gauge has increased 7.3 percent this year and trades at 11.2 times projected 12-month earnings, data compiled by Bloomberg show. The multiple is 14.8 for the MSCI World Index, which climbed 3.3 percent in 2014.

The Shanghai Composite Index added 0.9 percent to an eight-month high. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 0.3 percent, bringing its weekly rally to 2.5 percent. China may adopt targeted interest-rate cuts for shanty-town redevelopment, the agriculture sector and small companies, according to a front-page commentary today in the China Securities Journal.

“China’s seriousness in boosting its economy has bolstered investors’ sentiment in emerging markets,” Chanpen Sirithanarattanakul, head of research at DBS Vickers Securities (Thailand) Co., said by phone in Bangkok.

Polish, Indian and South Korean markets are closed for holidays.

To contact the reporters on this story: Priyanka Sharma in London at psharma142@bloomberg.net; Anuchit Nguyen in Bangkok at anguyen@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net

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

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