Emerging-Market Stocks Cap Longest Rally in Decade on China Bets

Emerging-market stocks rose for an 11th day, their longest streak of gains in 10 years, as a surprise slump in Chinese exports fueled speculation that the government will boost stimulus in the world’s second-largest economy.

Industrial & Commercial Bank of China Ltd. led a 2.2 percent gain in the Shanghai Composite Index. The Hang Seng China Enterprises Index rallied to a seven-year high. China Merchants Bank Co. soared 25 percent after announcing an employee stock-incentive plan. Russia’s ruble gained 2.8 percent as oil gained for a third day. Most other emerging-market currencies declined. Turkey’s lira fell to a record.

The MSCI Emerging Markets Index added 0.6 percent to 1,040.67. The yuan weakened the most in a month after China’s exports shrank 14.6 percent in March, fueling speculation that policy makers will favor a weaker currency and pursue measures to shore up economic growth.

“The falling exports data has raised concerns among investors about China’s outlook, but it also fueled bets that the government may provide additional stimulus to support growth,” Akbar Syarief, a fund manager at PT MNC Asset Management, said by phone from Jakarta.

A gauge tracking 20 emerging-market currencies declined 0.4 percent to the lowest level in more than a week. Brazil’s real slid 1.6 percent. The lira lost as much as 1.7 percent to 2.673 per dollar. Turkey’s currency has come under pressure amid political uncertainty before general elections, according to Erkin Isik, a fixed-income strategist at Turk Ekonomi Bankasi AS in Istanbul.

Ruble Rally

The ruble, which advanced 5.6 percent last week, appreciated to 52.126 per dollar. Russia’s currency is the world’s best performer this year after sliding 46 percent in 2014. Russia’s dollar-denominated RTS Index climbed 0.5 percent on Monday, extending its gain in 2015 to 27 percent.

Six out of 10 industry groups in the MSCI Emerging Markets Index rose on Monday, led by health care and industrial stocks. ICBC added 4.3 percent as the Shanghai Composite increased to the highest level since March 2008.

The MSCI emerging-market stock gauge has advanced 8.9 percent this year and trades at 12.5 times 12-month projected earnings, the most expensive since 2010 and a 26 percent discount to the MSCI World Index, data compiled by Bloomberg show. The developing-nation equity gauge’s 14-day relative-strength index increased to 79 on Monday, above the threshold of 70 that indicates to some technical analysts that an security is poised to decline.

Yield Spread

Hong Kong’s Hang Seng China Enterprise gauge jumped 4.3 percent. China Merchants Bank had a record gain. The company said it will raise as much as 6 billion yuan ($967 million) in a private placement to no more than 8,500 employees.

Any stimulus will be “to moderate the economic deceleration and it’s not the intention of the authorities to return China’s growth trajectory to 8 percent,” Tony Hann, the head of emerging markets at Blackfriars Asset Management Ltd. In London, said by e-mail. “The moves in China and in Hong Kong do not seem to have any connections with economic reality.”

The contraction in China’s overseas shipments compared with a median estimate for an 8.2 percent advance in a Bloomberg News survey. China’s central bank has relaxed rules on home purchasing, cut interest rates twice and reduced the amount banks have to set aside in the past six months, with economists forecasting further stimulus.

The premium investors demand to own developing-country debt over U.S. Treasuries increased three basis points to 347 basis points, according to JPMorgan Chase & Co. indexes.

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