Emerging Stocks Advance on China as Gold Producers Rally

Emerging-market stocks rose, capping the first weekly gain since November, as China’s equities climbed amid a decline in money-market rates. Gold producers led South African shares to the biggest rally in three months.

The MSCI Emerging Markets Index advanced 0.4 percent to 997.56, extending this week’s increase to 0.9 percent. The Shanghai Composite Index rose 1.4 percent as China’s money-market rate posted its biggest weekly drop since 2011, while the yuan climbed to a 20-year high. The FTSE/JSE Africa All Shares Index jumped 1.8 percent in Johannesburg as Harmony Gold Mining Co. surged. Turkey’s lira declined to a record low on concern political instability will escalate.

Stocks in emerging markets are poised for a second quarterly gain, the longest rally in a year, amid signs the global economy is recovering. Even after the advance, the MSCI Emerging Markets Index trades at 10.5 times estimated earnings, compared with a valuation of 14.8 for the measure for developed nation’s equities, according to data compiled by Bloomberg.

“Things continue to improve,” Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $367 billion, said by phone. “Price sensitive investors will certainly be attracted by the lower prices available in the EM space. But down doesn’t always equate to inexpensive, so selectivity will be important.”

The iShares MSCI Emerging Markets Index exchange-traded fund added 1.6 percent to $41.30. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, retreated 1.2 percent to 20.50.

Vale Rallies

Brazil’s Ibovespa rose, with homebuilder Brookfield Incorporacoes SA leading gains in companies that sell domestically as slower-than-forecast inflation eased concern that higher prices will hurt growth. Online retailer B2W Cia. Digital rose the most in two weeks. Vale SA, the world’s largest iron-ore producer, climbed as prices for the steel-making ingredient jumped for a third day.

Russian shares declined, curbing this year’s advance, as OAO Gazprom, the nation’s biggest company and natural gas producer, fell after a document showed it expects its dividend to miss analyst estimates. Turkey’s lira and stocks slumped the most in emerging markets and foreigners dumped the nation’s debt on concern the showdown between the government of Prime Minister Recep Tayyip Erdogan and the judiciary will worsen.

The FTSE/JSE Africa All Shares Index rallied to the highest level in seven weeks as Harmony Gold and Sibanye Gold Ltd. jumped at least 5.9 percent.

China, India

China’s stocks rose the most in five weeks, led by financial and technology companies. Industrial Bank Co. and Ping An Insurance (Group) Co. climbed at least 2.7 percent. China Vanke Co.’s B shares surged 4.9 percent. Sanan Optoelectronics Co. rallied 4.3 percent.

Indian equities advanced, led by technology companies and banks, as the benchmark index posted its second weekly advance. Software exporter Tata Consultancy Services Ltd. was the biggest gainer on the S&P BSE Sensex. State Bank of India, the largest lender by assets, rose to a two-week high. Cipla Ltd. added 1.8 percent, sending a gauge of drugmakers to a record.

Indonesia’s rupiah fell to a five-year low on concern capital outflows spurred by the planned U.S. stimulus cut will leave the local currency more vulnerable to a current-account shortfall. Thailand’s baht reached the lowest level since 2010 and the benchmark stock index led losses in Southeast Asia on concern worsening political unrest will spur further capital outflows. Malaysia’s ringgit snapped a nine-week decline.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 305 basis points, according to JPMorgan Chase & Co.

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