Emerging Market Stocks Rally on China Lending Outlook

Emerging-market stocks rose to a six-month high as China’s central bank asked lenders to expedite home-loan approvals and South African shares headed for a record. Indonesia’s rupiah led gains among currencies.

China Resources Land Ltd. rose 6 percent. South Korea’s Kospi index jumped 1.4 percent as the won fell against the dollar after a suspected intervention. South Africa’s equity gauge gained as BHP Billiton Ltd., the world’s biggest mining company, said it’s in talks to sell its Australian nickel unit. Brazil’s Ibovespa rose to the highest since November after companies including health insurer Qualicorp SA reported earnings that exceeded analysts’ estimates.

The MSCI Emerging Markets Index added 1 percent to 1,033.09. The People’s Bank of China called on the nation’s biggest lenders to accelerate mortgage approvals as Premier Li Keqiang seeks to ease a slowdown in the world’s second-largest economy. South Korean shares rose to the highest this year after Finance Minister Hyun Oh Seok vowed to protect smaller companies from exchange-rate volatility.

“The big story in emerging markets continues to be China,” Neil Shearing, chief emerging-markets economist at Capital Economics Ltd., said by phone from London. “Even though there are growing risks, policy makers have several tools they can deploy to mitigate the worst outcomes there.”

All 10 industry groups in the emerging markets gauge rose, led by consumer-discretionary companies and utilities. BHP Billiton jumped 1.2 percent, taking its three-day gain to 3.6 percent.

Brazil, South Africa

The Ibovespa advanced 0.9 percent. Qualicorp gained 3.6 percent.

The FTSE/JSE Africa All Shares Index in Johannesburg rose 0.9 percent to the highest since 1995. BHP is holding talks to sell all or part of the Australian unit. Nickel for delivery in three months snapped six days of gains, declining 5 percent on the London Metal Exchange.

The Dubai Financial Market General lost 0.2 percent. MSCI Inc. is scheduled to announce today its final list of United Arab Emirates’ companies to be included in the developing-nation measure.

Russia’s Micex index added 0.3 percent, increasing for a sixth day in the longest winning streak since September. The ruble appreciated for a second day against the dollar, strengthening 0.4 percent against the dollar.

Relative Value

Indian shares retreated from a record. The S&P BSE Sensex index slipped 0.2 percent after a 6.9 percent rally over the previous four days as exit polls showed a Bharatiya Janata Party-led alliance probably won 249 to 340 seats, with 272 needed for a majority. The results will be announced on May 16.

The emerging-markets gauge has increased 3 percent this year and trades at 10.7 times its 12-month projected earnings. The MSCI World Index of developed-nation shares has climbed 2.1 percent in 2014 and is valued at a multiple of 14.3.

The Kospi rose to the highest level since Dec. 30 as the won sank 0.6 percent. Hyundai Motor Co., South Korea’s largest automaker, added 2.6 percent, the most since March 26.

Bank of Korea declined to comment on whether there had been an intervention after trade minister Yoon Sang Jick said today the appreciation was hurting smaller exporters. The currency has risen 3.7 percent against the dollar this quarter, the most among 31 major currencies tracked by Bloomberg.

China Lending

China Resources climbed the most since March 21. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 1.4 percent. The central bank’s request to improve lending efficiency comes as an economic slump worsens, with unexpected decelerations in industrial output and investment growth.

Besides pushing for easier access to housing loans, “China’s central government is trying to let local governments make minor adjustments to policies, and that’s helping developers rebound,” said Castor Pang, head of research at Core Pacific-Yamaichi in Hong Kong. “But the lack of liquidity in the market won’t be so easy to resolve.”

The Jakarta Composite Index rose 1.4 percent to the highest since June 5. The rupiah gained on speculation Indonesia’s presidential candidates will announce their running mates today, reducing political uncertainty. Vietnam’s VN Index jumped 3 percent, the most since January 2013, according to data compiled by Bloomberg.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose 0.03 percentage point to 281 basis points, according to JPMorgan Chase & Co. indexes.

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