Emerging Stocks Advance to 13-Month High on China Growth Outlook
Emerging-market stocks rose to the highest since May 2013 as China unveiled measures to encourage lending, boosting the outlook for growth in the world’s second-largest economy.
The MSCI Emerging Markets Index rose 0.9 percent to 1,057.92. LG Display Co. (034220) surged 6.4 percent in Seoul as technology shares rallied. Agricultural Bank of China Ltd. advanced to a five-month high, pacing gains among lenders in Hong Kong. (700) The Ibovespa advanced for a third day as Eletropaulo Metropolitana SA led Brazilian utilities higher.
China’s central bank yesterday announced a 0.5 percentage-point cut in reserve requirements for some banks, giving details of a move aimed at supporting smaller companies and agriculture. Data today showed the country’s consumer prices rose 2.5 percent from a year earlier in May on food costs, below the government’s full-year target.
“The good CPI number is helping with the idea of China’s recovery,” Omair Ansari, an equities analyst at Renaissance Capital Ltd. in London, said by e-mail. “EM risk appetite has recovered as well. Valuations for MSCI EM are attractive.”
The emerging-markets index trades at 11.1 times projected 12-month earnings, having gained 5.5 percent this year. That compares with a multiple of 15.2 for the MSCI World Index, which has increased 4.5 percent in 2014.
All 10 industry groups in the developing-nation gauge rose today. The technology measure gained 1.7 percent. LG Display jumped the most since March after Macquarie Bank Ltd. raised its rating to outperform.
The Hang Seng China Enterprises Index (HSCEI) of mainland shares listed in Hong Kong added 1.1 percent. Yuan forwards posted the biggest three-day gain since January 2012 as the central bank boosted the currency’s fixing.
The Shanghai Composite Index also rose 1.1 percent, the steepest increase in a month. Citic Securities Ltd. (6030) led gains by brokerages as authorities allowed new share sales to resume.
The Ibovespa gained 0.6 percent. Eletropaulo rose 3.2 percent.
The Micex Index rose 0.4 percent after sinking as much as 0.6 percent. Ukraine and Russia failed to reach an agreement on natural gas deliveries during overnight negotiations hosted by the European Union. Russian state-controlled gas producer OAO Gazprom ended the session 0.2 percent higher after reversing a 1.2 percent loss. The ruble fell 0.1 percent against the dollar.
South Africa’s rand weakened 0.7 percent. Central Bank Governor Gill Marcus said the economy is facing “enormous headwinds,” caused in part by the worsening labor environment. The longest mining strike in the nation’s history that’s shut the world’s largest platinum mines is threatening to push the economy into its first recession in five years.
Dubai’s DFM General Index (DFMGI), the world’s best-performing stock gauge this year in dollar terms, tumbled 1.6 percent to the lowest level since May 20. Arabtec Holding Co. (ARTC) led the slump on bets Aabar Investments PJSC, its second-largest investor, is offloading shares in the Dubai builder.
A Bloomberg gauge tracking 20 emerging-market currencies declined for a second day. The premium investors demand to own developing-country debt over U.S. Treasuries fell one basis point to 252, according to JPMorgan Chase & Co. indexes.
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