Emerging Stocks Advance as Consumer, Energy Gains Outweigh China

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Emerging-market stocks climbed as consumer shares rallied and higher oil prices lifted energy companies, outweighing declines in Shanghai after fixed-asset investment in China slowed to the weakest pace in more than 14 years.

Russia’s ruble and South Africa’s rand strengthened at least 1 percent against the dollar. Indian shares gained 1.4 percent after data showed retail inflation in April cooled. A gauge of developing-nation energy companies ended a two-day decline. The Shanghai Composite Index slid 0.6 percent, halting the measure’s biggest three-day increase since January.

The MSCI Emerging Markets Index rose 0.4 percent to 1,033.88. Brent crude, which settled at $66.81 a barrel after slipping 5 cents in London Wednesday, is trading about 16 percent higher than its average price for this year. China’s industrial output growth increased in April while investment slowed, suggesting more monetary easing may be needed to spur a pick-up.

“Emerging markets continue to be driven by macro-factors” including oil, Martial Godet, the head of emerging-market equities and derivatives strategy at BNP Paribas SA in Paris, said by e-mail. “Dollar weakness is supportive for oil and EM. More easing is required in China.”

The developing-nation gauge has jumped 8.1 percent this year and is valued at 12.4 times 12-month projected earnings, data compiled by Bloomberg show. The MSCI World Index has risen 4.7 percent in the period, and trades at a multiple of 16.7.

MSCI Additions

Qatar’s QE Index added 1 percent to the highest level since March 2. Ezdan Holding Group and Qatar Insurance Co. jumped at least 6 percent as MSCI Inc. said the shares will be included in the MSCI Qatar Index at the close of May 29.

Arabtec Holding Co. slumped 3.5 percent after the United Arab Emirates’ largest publicly traded construction company posted its steepest quarterly loss on record. The stock was the biggest decliner on Dubai’s DFM General Index.

Vale SA tumbled 2.6 percent in Sao Paulo after Moody’s Investors Service lowered its credit-rating outlook on the company to negative amid a plunge in iron-ore prices. Brazil’s benchmark Ibovespa slid 0.7 percent.

Nine of the 10 industry groups in the MSCI developing-country index rose, led by consumer-discretionary shares. Sasol Ltd., the world’s biggest maker of liquid fuels from coal, led energy stocks higher, rising 2.4 percent in Johannesburg.

An index tracing 20 emerging-market currencies rose 0.6 percent to the highest level this month.

India Inflation

India’s S&P BSE Sensex advanced for the third time in four days, led by banks, as slowing retail inflation spurred speculation the central bank may lower interest rates.

Hong Kong’s Hang Seng China Enterprises Index lost 0.8 percent, while the Shanghai Composite dropped for the first time in four days. The gauge had rallied 6.8 percent in the past three days, fueled by the central bank’s third interest-rate cut in six months to support the economy.

The premium investors demand to own emerging-market debt over U.S. Treasuries narrowed four basis points to 327 basis points on Wednesday, according to JPMorgan Chase & Co. indexes.