Emerging Stocks Advance as China Manufacturing Exceeds Estimates

Emerging-market stocks rose for a third day after a gauge of Chinese manufacturing increased more than forecast and Turkish equities jumped to a 14-month high as the central bank governor signaled further interest-rate cuts.

Shares in Istanbul added 1.2 percent, while the lira slipped 0.1 percent after central bank Governor Erdem Basci said the currency was “reasonably” valued. The EGX 30 rallied the most since June 5, led by Commercial International Bank Egypt SAE, which climbed after reporting a surge in quarterly profit. Ping An Insurance (Group) Co. led a gauge of Hong Kong-traded Chinese shares to a seven-month high. Ukraine’s dollar bonds slipped as Prime Minister Arseniy Yatsenyuk resigned.

The MSCI Emerging Markets Index gained 0.3 percent to 1,080.56. China’s preliminary Purchasing Managers’ Index rose to an 18-month high in July, bolstering the government’s chances of meeting its economic growth target. Analysts at banks including Citigroup Inc. raised their 2014 expansion forecasts after the nation said last week second-quarter gross domestic product increased 7.5 percent.

“We had some good data overnight which helped the Chinese equity market,” John Lomax, an emerging-market strategist at HSBC Holdings Plc, said by phone from London. “The market is ignoring geopolitical factors and focusing on what remains a pretty benign overall economic environment.”

Stock Valuations

The emerging-markets gauge is up 7.8 percent this year and trades at 11.2 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has gained 5.7 percent and is valued at a multiple of 15.1.

Six out of 10 industry groups in the developing-nation gauge advanced, led by financial and telecommunication companies. Ping An Insurance surged 3.7 percent to the highest level in more than three months in Hong Kong.

Turkish stocks climbed for the third day after Basci said the market is pricing in a rate cut of 50 basis points in the next three months as the central bank maintained its year-end inflation forecast.

To stop the lira’s depreciation earlier this year, policy makers more than doubled the benchmark rate in January to 10 percent. Since then, the monetary policy committee has cut the rate by 1.75 percentage points, to 8.25 percent. The committee next meets Aug. 27. The currency swung between gains and losses today.

Brazil, Egypt

The yield on Ukraine’s 2017 dollar bonds increased 39 basis points to 8.63 percent. Yatsenyuk told the parliament in Kiev today that he’s stepping down after losing the support of his allies and failing to pass legislation.

The Ibovespa increased 1 percent in Sao Paulo. Mining company Vale SA gained 1.4 percent to three-month high after saying iron-ore production jumped to a record in the second quarter.

Egypt’s EGX 30 surged 2.1 percent. Commercial International Bank Egypt, the gauge’s heaviest-weighted stock, climbed to the highest level since 1997 after reporting a gain in second-quarter net income.

The Micex Index climbed 0.2 percent after reversing a loss of as much as 0.9 percent. The ruble fell 0.4 percent against the dollar.

The Hang Seng China Enterprises Index increased 1.1 percent. The Shanghai Composite Index gained 1.3 percent to a three-month high. The manufacturing index from HSBC Holdings Plc and Markit Economics, known as flash PMI, was at 52, exceeding the 51 median estimate.

Saudi Arabia’s benchmark stock index extended a rally, taking a four-day advance to 4.9 percent, after the Capital Market Authority announced plans this week to open the Arab world’s biggest bourse to foreign investors.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell five basis points to 258, according to JPMorgan Chase & Co. indexes.

Before it's here, it's on the Bloomberg Terminal.