Emerging-market stocks posted a weekly gain as Chinese shares rallied amid bets the government is boosting funds to support the market.
The MSCI Emerging Markets Index rose 0.9 percent to 940.95. It was unchanged Friday. The Shanghai Composite Index soared the most in a week. Tencent Holdings Ltd. jumped 2.4 percent in Hong Kong as a measure of technology shares rose the most among 10 industry groups. The Ibovespa slid 1.4 percent and Brazil’s real weakened amid concern political tension will make it harder for President Dilma Rousseff to trim budget deficits.
A state-backed Chinese agency has 2.5 trillion yuan ($403 billion) to 3 trillion yuan on tap to support stocks, people familiar with the matter said. Receding concerns over Greece and China put the spotlight back on U.S. interest rates, as Federal Reserve Chair Janet Yellen reiterated that she intends to increase borrowing costs this year.
“There was a technical rebound this week led by China and Greece,” Martial Godet, head of emerging-market equities and derivatives strategy at BNP Paribas SA in Paris, said by e-mail. “There could be a bit of volatility on EM around the first one or two rate hikes.”
Stock markets in Turkey, Indonesia, Malaysia and the Philippines were closed for holidays.
Petroleo Brasileiro SA slumped 4.4 percent in Sao Paulo as posted the longest run of weekly declines since January. The real weakened 1.1 percent against the dollar.
Brazilian assets declined as the head of the lower house said he is breaking with the ruling coalition. Rousseff’s administration has suffered a series of defeats in Congress over the past month as lawmakers frustrate efforts to contain spending and raise taxes.
The yield on Russia’s five-year ruble notes dropped nine basis points to 10.49 percent. Policy makers may reduce the key rate by a further 250 basis points by the end of 2015 after its cuts totaling 550 basis points so far this year, Bank of America analysts forecast. The ruble weakened 0.1 percent against the dollar.
The Micex Index declined 0.2 percent in Moscow. The dollar-denominated RTS Index slid 0.8 percent.
Tencent climbed to a two-week high. The Shanghai Composite advanced for a second day, erasing a weekly drop. A total of 545 stocks, about 19 percent of all listings, were halted on mainland exchanges, down from more than 1,300 at the end of last week.
The funding made available to China Securities Finance Corp., a state agency which provides margin finance, are for offering liquidity support to brokers and to purchase stocks and mutual funds, the people said, asking not to be named because the information wasn’t public.
The developing-nation index trades at 11.6 times projected 12-month earnings, compared with 16.6 times for the MSCI World Index, data compiled by Bloomberg show. The premium investors demand to hold emerging-market debt over U.S. Treasuries was unchanged at 350 basis points, according to JPMorgan Chase & Co. indexes.