Most Emerging-Market Stocks Gain as Russia Rebounds; Rand Climbs

  • Polish shares rise from lowest closing level since 2009
  • South Africa's currency strengthens first time in eight days

Most emerging-market stocks rose as Russian equities rebounded from the biggest selloff in almost two years and China stepped up its defense of the yuan.

Russian shares advanced after valuations fell to their lowest level in more than a year while stocks in Poland climbed from the lowest levels since 2009. The Shanghai Composite Index ended the day higher amid volatile trading. South Africa’s rand strengthened for the first time in eight days.

Emerging-market stocks have been battered in a turbulent start to the year amid concern Asia’s largest economy is in worse shape than previously thought and prospects for the Federal Reserve to further increase interest rates. The People’s Bank of China repeatedly intervened in the offshore yuan market on Tuesday, according to people familiar with the matter, following efforts to talk up the currency from two senior government officials on Monday.

“It’s all about China,” said Nathan Griffiths, a senior emerging-market equities manager who helps oversee $1.2 billion at NN Investment Partners in The Hague and prefers Indian and Mexican shares. “Either they are playing a very high stakes game by generating volatility to put a stop to the Fed rate hike outlook, or they are genuinely losing control of the system.”

Stocks

The MSCI Emerging Markets Index closed little changed at 723.21, with 429 stocks higher and 376 lower. A gauge of consumer discretionary stocks rose the most among 10 industry groups, adding 0.9 percent. Energy companies slumped 0.6 percent as Brent crude fell below $31.

Russia’s Micex Index rose 0.5 percent after falling 3.8 percent on Monday. Banks led Poland’s WIG20 Index up 2.7 percent after Puls Biznesu newspaper cited Finance Minister Pawel Szalamacha saying the government doesn’t plan changes to the country’s pension funds. The Ibovespa slumped 1.9 percent, led by a 9.2 percent plunge in the Brazilian state-run oil company Petroleo Brasileiro SA.

The Shanghai Composite Index rose 0.2 percent, erasing an earlier loss of as much as 1.3 percent. The Hang Seng China Enterprises Index of mainland equities listed in Hong Kong declined 0.8 percent after falling to the lowest level since 2011 on Monday.

Qatar led declines in Gulf stocks, with the QE Index sliding 2 percent to its weakest since September 2013. Abu Dhabi’s ADX General Index fell 1.5 percent and Saudi Arabia’s Tadawul All Share Index lost 1.8 percent. Dubai’s DFM General Index declined 0.7 percent, bringing its eight-day loss to 7.3 percent.

Currencies

The rand gained 0.7 percent to 16.6663. That trimmed this year’s decline to 7.2 percent, the biggest retreat among 31 emerging-market and major currencies tracked by Bloomberg.

A gauge of 20 developing-nation currencies slipped 0.1 percent as Russia’s ruble and the Colombian peso declined with oil prices, offsetting advances in the rand and Argentina’s peso.

The yuan gained 0.2 percent in offshore trading after China’s central bank set the fixing little changed for a third day and government officials pushed back against calls for further weakness. That came after the reference rate was weakened by 1.1 percent in the first four trading days of 2016.

The premium investors demand to own emerging-market debt over U.S. Treasuries widened eight basis points to 445, according to JPMorgan Chase & Co. indexes.

Chinese government bonds gained for a fourth day in the onshore market, pushing the 10-year yield down six basis points to 2.77 percent as the benchmark money-market rate slipped. The yield on similar-maturity Indonesian sovereign notes fell six basis points to 8.72 percent.

The yuan’s interbank rates surged to a record in Hong Kong on speculation intervention by China’s central bank is draining the supply of the currency. The overnight Hong Kong Interbank Offered Rate climbed 53 percentage points to 66.82 percent, while the one-week rate jumped 22.6 percentage points to 33.8 percent.

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