Emerging Stocks Advance as Chinese Manufacturing Resumes Growth

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Emerging-market stocks rose to a four-week high as a report that showed Chinese manufacturing unexpectedly expanded boosted the outlook for growth in the world’s second-largest economy.

The Shanghai Composite Index rose to a seven-year high. Nigerian equities rallied the most in the world after former military ruler Muhammadu Buhari defeated President Goodluck Jonathan in a largely peaceful vote. The dollar-denominated RTS Index jumped for a third day as data showed Russia’s economy unexpectedly grew in the fourth quarter. The Ibovespa advanced to the highest level since November in Sao Paulo.

The MSCI Emerging Markets Index increased 0.9 percent to 982.93. China’s manufacturing Purchasing Managers’ Index rebounded in March, data showed on Wednesday, suggesting stimulus efforts have started to bolster factories in the world’s second-largest economy.

Sentiment is being “helped by the stronger China PMI number,” Benoit Anne, head of emerging-market strategy at Societe Generale SA in London, said by e-mail. “Overall, this is still very much a choppy market.”

The developing-nation index has gained 2.8 percent this year and trades at 11.9 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 1.7 percent in 2015 and is valued at a multiple of 16.6.

Nigeria Election

Investors pulled $1.6 billion from U.S. exchange-traded funds that buy emerging-market stocks and bonds in the first quarter, the second straight period of losses for the ETFs. Brazil led the outflows.

The Nigerian Stock Exchange All Share Index surged 8.3 percent to the highest level this year. Jonathan, who lost in the first defeat of an incumbent since Nigeria gained independence in 1960, sent his “best wishes” to Buhari after the vote, bolstering investor confidence as the country contends with a six-year-old war against the Islamist militant group Boko Haram.

The RTS Index rallied 3.4 percent, the biggest gain since mid February. Russia’s gross domestic product expanded 0.4 percent in the fourth quarter, compared with an estimate for no growth among 11 analysts surveyed by Bloomberg. The world’s biggest energy exporter’s economy is forecast to contract 4 percent this year amid lower energy prices and international sanctions linked to the Ukraine conflict.

Brazil Deficit

The Ibovespa rallied 2.3 percent and the real strengthened 1 percent against the dollar. President Dilma Rousseff in an interview affirmed a commitment to do what it takes to meet fiscal targets, fueling speculation that Brazil will be able to avoid a junk credit rating. Rousseff’s comments came hours after hours after the government surprised analysts with a budget deficit that was twice as wide as forecast.

Nine out of 10 industry groups in the developing-nation gauge stock advanced, led by energy companies. Brent crude gained 3.6 percent to $57.10 a barrel as a report showed U.S. oil production declined from the highest level in more than three decades.

The Hang Seng China Enterprises Index rallied 1.6 percent, its third day of gains, while the Shanghai Composite Index advanced 1.7 percent.

The official Purchasing Managers’ Index rose to 50.1 in March, exceeding the estimate of 49.7 and February’s 49.9. China on Tuesday announced plans to start an insurance system for bank deposits will start on May 1.

The premium investors demand to own emerging-market debt over U.S. Treasuries widened two basis points to 369 basis points, according to JPMorgan Chase & Co. indexes.

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