Emerging Stocks Rise as Chinese Equities Extend Seven-Year HighChoong En Han and Maria Levitov
Emerging-market stocks rose with currencies on bets China will accelerate monetary stimulus and as concern over the euro area’s debt crisis waned. Turkey’s lira slid after policy makers left interest rates unchanged.
The MSCI Emerging Markets Index added 0.5 percent to 1,047.61. Huaneng Power International Inc. surged to a record in Hong Kong, while the Shanghai Composite Index jumped 2.4 percent. Iron-ore producer Vale SA led gains in Brazil as commodity prices advanced. OAO Gazprom paced a drop in Russian shares as the European Commission unveiled antitrust charges against the company.
Chinese stocks are up 89 percent in the past six months, spurred by lower borrowing costs and bets the government will do more to revive growth. Greece said Tuesday that the country and its creditors are narrowing differences, while people familiar with the matter said the European Central Bank’s Governing Council raised the cap on Emergency Liquidity Assistance by about 1.5 billion euros ($1.6 billion) to 75.5 billion euros.
“Expectations of more Chinese stimulus are clearly supportive,” Michael Ganske, head of emerging markets at Rogge Global Partners Plc in London, said by e-mail. “Also some good news from Athens means no imminent default and more time for negotiations.”
The developing-nation index has gained 9.6 percent this year and trades at 12.6 times projected 12-month earnings, the most expensive since April 2010, data compiled by Bloomberg show. The MSCI World Index has risen 4.5 percent in 2015 and is valued at a multiple of 17.
Five out of 10 industry groups in the emerging-country gauge rose, led by utility and industrial stocks. Huaneng Power surged 15 percent and Huadian Power International Corp. soared 16 percent to a record.
The Shanghai Composite climbed for a second day as Aluminum Corp. of China Ltd. led gains for material companies. The Hang Seng China Enterprises Index added 1 percent and Tencent Holdings Ltd. climbed 2.3 percent in Hong Kong, providing the biggest boost to MSCI’s emerging-markets measure.
A Bloomberg index tracking 20 emerging-market currencies rose 0.1 percent, the first gain in four days.
The lira dropped 1 percent against the dollar. The central bank kept its main one-week repo rate at 7.5 percent, matching the median estimate in a Bloomberg survey of 23 economists, amid government pressure not to raise borrowing costs. The nation’s benchmark stock index slipped 0.6 percent.
The Ibovespa advanced 1.6 percent in Sao Paulo. Vale jumped 9.8 percent, leading gains in Brazilian commodity producers. The Standard & Poor’s GSCI index of 24 raw materials rose 0.1 percent.
The Micex Index lost 1.9 percent, its first drop in three days, as Gazprom slid 2.9 percent in Moscow. Margrethe Vestager, the European Union’s competition chief, said Gazprom may have imposed unfair prices by preventing gas from flowing from certain central eastern European countries to others.
The premium investors demand to own emerging-market debt over U.S. Treasuries narrowed 10 basis points to 342 basis points, according to JPMorgan Chase & Co. indexes.