Emerging-market stocks rose the most in three years as Chinese shares ended the steepest five-day rout since 1996, while turmoil in global markets sparked by growth concerns weakened the case for an increase in U.S. interest rates.
The Shanghai Composite Index soared 5.3 percent amid speculation state funds have resumed buying. Equity gauges in Saudi Arabia and Dubai rose at least 2.9 percent. The ruble gained the most among its peers, while Turkey’s lira advanced 0.8 percent.
The MSCI Emerging Markets Index surged 3.3 percent to 813.08 in New York in the biggest gain since 2012, as valuations near the lowest level since March 2014 spurred appetite for riskier assets. The U.S. rally halted a selloff that’s shaved more than $8 trillion from global equities since China devalued its currency on Aug. 11.
“There is a general rebound in the U.S. market, which provides support to emerging equities, and there is a general sense of relief after a big panic,” said Alan Gayle, senior strategist for Atlanta-based Ridgeworth Investments, which has about $42.5 billion in assets. “The market turmoil is likely influenced the Federal reserve thinking in the timing of the rates lift-off.”
All 10 industry groups in the emerging-markets measure rose on Thursday, led by energy shares. Cnooc Ltd., China’s biggest offshore oil and gas explorer, surged 14 percent in Hong Kong. PetroChina Co. rallied 4.1 percent.
The MSCI developing-nations measure is still down 7 percent since China devalued the yuan, with the average price-to-earnings ratio for the next 12 months at 10.6 times, a 30 percent discount to the MSCI World Index.
The 14 day relative-strength index on the gauge climbed above 30 today, ending its longest stretch of trading below the oversold level since June 2013. Trading under the 30 threshold suggests to some technical analysts that a security or index is poised to rebound after a sell-off.
Ukraine’s $2.6 billion of notes due in July 2017 jumped as the Finance Ministry said it reached an accord with a creditor committee that includes a 20 percent writedown to the face value of about $18 billion of Eurobonds.
Brent crude rallied 10 percent as U.S. government data showed crude inventories unexpectedly shrank in the world’s biggest oil consumer. Oil also grew as data showed U.S. gross domestic product rose at a 3.7 percent annualized rate, exceeding all estimates of economists surveyed by Bloomberg, and up from the 2.3 percent reported last month.
Dubai’s DFM General Index closed at a one-week high and Saudi Arabia’s Tadawul All Share Index climbed for a second time in three days. Gazprom PJSC added 2.9 percent in Moscow as Russia’s Micex Index rose 2.1 percent. Turkish shares increased 1.6 percent, while the lira strengthened the most in a month.
Ukraine’s dollar-denominated bond maturing in April 2023 rose 15 cents to 70.37 cents on the dollar. The Ukraine agreement pushes back redemption dates by four years and sets interest at 7.75 percent on all maturities, according to an e-mailed statement from the Finance Ministry. Russia, which was offered the same terms as private bondholders, said it won’t participate in Ukraine’s restructuring.
The Shanghai Composite jumped in the last 45 minutes of trading as financial stocks rallied. The index tumbled 23 percent to an eight-month low in the previous five days. A gauge of 50-day volatility on the measure surged to its highest level since 1997 this week.
Hong Kong’s Hang Seng China Enterprises Index climbed 4.6 percent, its first gain in 10 days. Indonesian shares increased 4.6 percent as the government announced stimulus measures.