Emerging Stocks Rise to 27-Month High, Extending Quarterly Gain

Emerging-market stocks rose to a 27-month high as new Chinese measures to tame real-estate prices and Ireland’s plan to recapitalize banks boosted demand for higher-yielding assets.

The MSCI Emerging Markets Index climbed 0.5 percent to 1,075.53 as of 5:40 p.m. in New York, extending its third-quarter rally to 17 percent. The Shanghai Composite Index jumped 1.7 percent for the biggest gain in almost seven weeks and the top advance among benchmark indexes in major developing nations.

China’s policy makers have “been doing exactly the right thing in trying to engineer a soft landing” in the economy, Geoff Lewis, head of investment services at JPMorgan Asset Management, said in a Bloomberg Television interview in Hong Kong. “Growth has come down, but not too precipitously.”

China, the fastest-expanding major economy, will speed up the introduction of a trial property tax in some cities and then expand the levy to the whole country to curb real-estate speculation, the government said yesterday. Citigroup Inc. analysts said the measures have “partially settled” policy uncertainties. Ireland’s government plans to take majority control of Allied Irish Banks Plc and pump extra cash into Anglo Irish Bank Corp. as it seeks to rebuild its financial system.

Stocks rose to their highest levels of the day after U.S. government data showed the economy and personal consumption grew more than estimated in the second quarter and jobless claims decreased more than forecast last week. Investors may get more clarity on the outlook for growth in the world’s largest economy when Federal Reserve Chairman Ben S. Bernanke testifies before the Senate Banking Committee today.

Monthly Gain

The MSCI emerging-market index had its best quarterly gain in a year after rallying 11 percent in September, the best monthly increase since July 2009. For the year, the 21-country gauge is up 8.7 percent, following its record 75 percent rally in 2009.

China Vanke Co. and Poly Real Estate Group Co. led an index of Chinese property stocks to its biggest gain in four months. The industry’s shares have already fully priced in government measures to tame real-estate prices and the effects of yesterday’s policy tightening are limited, according to China International Capital Corp. Property prices in 70 major Chinese cities rose 9.3 percent in August from a year earlier.

India’s Bombay Stock Exchange Sensitive Index rose 0.6 percent today, while Indonesia’s Jakarta Composite Index climbed 0.2 percent to an all-time high. Russia’s Micex Index advanced 1.5 percent and Poland’s WIG20 increased 1.2 percent.

Brazil’s Bovespa stock index advanced 0.3 percent. Gains in the country’s benchmark stock index were led by OGX Petroleo & Gas Participacoes SA, Itau Unibanco Holding SA and Vale SA.

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