Emerging-market stocks rose, with the benchmark index gaining the most in almost two weeks, as investors speculated the Federal Reserve may announce another round of quantitative easing to bolster the U.S. economy.
The MSCI Emerging Markets Index added 1 percent to 1,115.99 at 11:03 in London, set for its steepest increase since Oct. 13. Chinese shares jumped to a six-month high. Indonesian stocks rallied 1.3 percent to a record and the Micex index advanced 1.1 percent.
Emerging-market currencies strengthened, with the Korean won and the South African rand appreciating by more than 0.6 percent to the dollar and the ruble strengthening 0.5 percent after the Group of 20 finance chiefs pledged to avoid “competitive devaluation” at the end of a meeting in South Korea on Oct. 23. That reinforced expectations the Fed will announce significant purchases of securities at its November meeting, boosting the supply of dollars chasing risky assets in a policy known as “QE2,” analysts said.
“Overall opinion is mixed as whether QE2 will make much difference to the overall direction of the economy but there’s a higher level of confidence that it will boost asset prices for a period of time,” Jim Reid, head of fundamental strategy at Deutsche Bank AG in London, and Nick Burns, a credit strategist at the bank, wrote in a report today. “Emerging markets and commodities seem to be seeing the largest flows as a result of the liquidity.”
OAO Norilsk Nickel, Russia’s biggest mining company, jumped 3.2 percent, the most in more than two months. OAO Gazprom, the world’s largest natural-gas producer, gained 1.4 percent.
Crude oil rose 1.3 percent to $82.74 a barrel in electronic trading in New York. Copper for three-month delivery climbed 2.2 percent on the London Metal Exchange.
Turkey’s ISE National 100 Index gained 0.7 percent to a record. Petrol Ofisi AS, the country’s biggest fuel retailer, rose 5.9 percent to its highest level since February after OMV AG, central Europe’s biggest oil company, agreed to buy a 54 percent stake for 1 billion euros ($1.4 billion).
The Shanghai Composite Index advanced 2.6 percent to its highest level since April 16. China’s focus on both income growth and redistribution in its next five-year economic plan is bullish for the nation’s consumer stocks, according to China International Capital Corp.
Gree Electric Appliances Inc., China’s largest maker of home air-conditioners, surged 6.9 percent and liquor maker Luzhou Laojiao Co. gained 9.5 percent after reporting higher profit.
Morgan Stanley raised Asia’s rating to “overweight” and increased China’s allocation, while cutting Latin America to “underweight” in a global emerging markets model portfolio, Jonathan Garner, the brokerage’s Hong Kong-based chief Asian and emerging-market strategist, said in a report today.
India’s Sensitive Index, or Sensex, gained 0.7 percent in Mumbai as global funds became net buyers of the nation’s stocks for a 37th trading day, the longest run of inflows in more than five years, according to data compiled by Bloomberg.
Dr. Reddy’s Laboratories Ltd., India’s second-biggest drugmaker by revenue, rose 1.6 percent to the highest in at least 19 years after its second-quarter profit jumped 32 percent.
South Korea’s Kospi index gained 1 percent. Kia Motors Corp., the nation’s second-biggest automaker, advanced 5.8 percent in Seoul trading after Goldman Sachs Group Inc. raised its stock recommendation to “buy,” citing volume growth.
Taiwan’s TAIEX index surged 1.7 percent, its biggest rally in six weeks.
EVA Airways Corp. advanced the daily maximum 7 percent after Taiwan’s second-largest air carrier posted nine-month net income of NT$11 billion, compared with a net loss of NT$3.9 billion a year earlier. Goldman Sachs raised its share-price estimate, while keeping the recommendation at “neutral.”