- Faster-than-expected China GDP growth helps boost sentiment
- Uralkali slides as stock to be removed from MSCI Indexes
Emerging-market stocks climbed as positive earnings from India and gains in Turkish shares helped extend a rally that’s boosted riskier assets this month. Weaker commodity prices weighed on South African gold producers as Russia’s ruble fell with oil.
Reliance Industries Ltd., operator of the world’s largest oil-refining complex, rose 5.6 percent in Mumbai after its profit beat estimates. The Borsa Istanbul 100 Index jumped 1.6 percent after German Chancellor Angela Merkel argued in favor of 3 billion euros ($3.4 billion) of aid to Turkey. The Ibovespa gained and the real strengthened as Brazilian President Dilma Rousseff reassured investors that Finance Minister Joaquim Levy will stay in his post. Gold Fields Ltd. and AngloGold Ashanti Ltd. fell at least 5.3 percent in Johannesburg as bullion retreated for a third day.
The MSCI Emerging Markets Index rose 0.2 percent to 867.25. The gauge has rallied 9.5 percent in October driven in part by waning bets for the Federal Reserve to raise interest rates this year. While data on Monday showed China’s economy grew at a faster pace than anticipated in the third quarter, the 6.9 percent rate of expansion was the slowest since 2009.
“If the data in China stabilizes, and it’s not clear the Fed will hike in December, then EM equities can continue to rally," said Michael Wang, a strategist at hedge fund Amiya Capital in London, who prefers stocks in South Korea, India and China over those in Thailand, Brazil and Turkey.
The Ibovespa advanced 0.5 percent and the real appreciated 1 percent against the dollar. Rousseff said Levy will stay in his post because the government agrees with his policies. She made the comments in response to a newspaper interview the head of her Workers’ Party gave in which he said the president had to change the current economic policies to increase consumer and business financing and that the finance minister should leave if he doesn’t agree.
Seven of 10 industry groups in the emerging-markets measure rose, led by a 1.2 percent gain in health-care companies. Sino Biopharmaceutical Ltd. rallied 4 percent after the stock was cited by China International Capital Corp. as top picks in mainland shares traded in Hong Kong. A gauge of raw-material stocks slumped 0.7 percent.
Investors added money to U.S. exchange-traded funds that invest in emerging markets for the second straight week, the first back-to-back inflows in almost four months.
While stocks gained, a gauge tracking 20 emerging-market currencies decreased 0.4 percent in its second day of declines. A 3.7 percent drop in Brent crude to less than $50 a barrel weighed on Russia’s currency, which fell 1.6 percent. Malaysia’s ringgit weakened 0.7 percent, while the South African rand depreciated 1.6 percent.
The Borsa Istanbul 100 Index climbed 1.6 percent. Merkel voiced support for Turkish demands for European Union aid, faster visas and progress on its bid to join the bloc during a visit that placed her in the midst of an election campaign as Turks prepare to head to the polls in November for the second time in six months.
Indian stocks advanced 0.5 percent as Reliance Industries gained the most in four months.
The MSCI Emerging Markets Index has fallen 9.3 percent this year and trades at 11.4 times its 12-month estimated earnings, data compiled by Bloomberg show. The MSCI World Index trades at a multiple of 15.7 after falling 1.7 percent in 2015.
Uralkali, the world’s largest potash producer, slumped 8.9 percent to the lowest since July in Moscow. MSCI Inc. said on Friday it will remove the company’s common shares from its global indexes effective Oct. 21 following the company’s share buyback.
While the Hang Seng China Enterprises Index increased 0.5 percent to the highest level since Aug. 18, the Shanghai Composite closed 0.1 percent lower after it earlier climbed as much as 1 percent. The third-quarter GDP growth data remains below the government’s target of 7 percent.
“Although China’s growth data came ahead of estimates, investors are still expecting a continuing downtrend in its economy,” said Jeffrosenberg Tan, a money manager at Jakarta-based PT Sinarmas Asset Management. The data may also affect the Fed’s decision on the timing of interest-rate increases, he said, adding that he has raised his holdings in stocks and will buy “selectively” in any market corrections.