Emerging Markets Emerging stocks rise to November high as commodity shares rally

by **Cals** Thu 14 Jul 2016, 04:54

Emerging Markets

[size=28]Emerging stocks rise to November high as commodity shares rally

By Bloomberg / Bloomberg | July 13, 2016 : 5:14 PM MYT

MANILA (July 13): Emerging-market stocks rose to the highest level in eight months as commodity producers climbed amid prospects for stimulus in major economies. Developing-nation currencies retreated.

A gauge of mainland companies traded in Hong Kong advanced to a one-month high as China’s export data reinforced speculation over central bank stimulus. Malaysian stocks climbed to a one-month high and the ringgit fluctuated after the country cut interest rates for the first time in seven years. Vietnamese equities rallied to the highest level since 2008. A measure of currencies halted a four-day gain as South Africa’s rand weakened from a two-month high and Turkey’s lira retreated.

Developing stocks rallied for a fifth day, sending valuations in the benchmark measure to the highest level in more than a year. The UK’s vote to leave the European Union has bolstered prospects for stimulus in major economies, boosting demand for riskier assets. Foreign investors this week plowed more than US$2 billion into equities in India, Indonesia, South Korea, Philippines, Thailand and Taiwan, data compiled by Bloomberg show.

“We could see more monetary stimulus and quantitative easing that will help boost global growth,” Jonathan Ravelas, chief market strategist at BDO Unibank Inc, said in Manila. “The party goes on but it is prudent for investors to re-balance their portfolios by taking some money out.”

China’s exports and imports slipped in dollar terms in June as soft demand at home and abroad continues to weigh on the world’s largest trading nation. The Bank of England is seen easing policy this week, while Japan’s Prime Minister Shinzo Abe ordered his economy minister to compile stimulus measures this month. Futures contracts show a 34% chance the Federal Reserve will raise interest rates by year-end even after a recent strong US jobs report.

Stocks

The MSCI Emerging Markets Index rose 0.1% to 855.28 at 9:01 a.m. in London. The gauge has advanced 7.6% this year and trades at 12.2 times its 12-month projected earnings, the highest level since May 2015. The MSCI World Index of developed markets has increased 1.9% and is valued at a multiple of 16.2 times.

Eight out of 10 industry groups in the emerging-markets index advanced, paced by energy and materials shares. PT Adaro Energy jumped 8.2% in Jakarta. Jiangxi Copper Co rallied 3.7% in Hong Kong. The metal in London surged to its highest level since late April, briefly topping US$5,000 a metric ton. South Korea’s Kospi climbed to a one-month high as Posco, South Korea’s biggest steelmaker, rallied 6.8%.

Hong Kong’s Hang Seng China Enterprises Index advanced 0.6%, its third day of gains. The Shanghai Composite Index increased 0.4%. Data on Wednesday showed overseas shipments fell 4.8% from a year earlier, while imports dropped 8.4%. Both exports and imports in yuan terms looked better, with outbound shipments eking a small gain, reflecting the influence of a weakening currency.

Chinese Premier Li Keqiang was cited as saying Monday that the nation maintained stable growth in the second quarter and that consumer prices are generally stable. The country’s pension funds, which have about 2 trillion yuan (US$300 billion) for investment, are preparing to deploy some of their holdings in securities including equities in the second half.

The FTSE Bursa Malaysia KLCI Index advanced 0.3%, its third day of gains. Eco World Development Group Bhd. jumped 7.3% to lead a rally among property developers.

Currencies, Bonds

The MSCI Emerging Markets Currency Index retreated 0.1% after a four-day advance. The rand and lira each dropped 0.4%.

The ringgit swung between gains and losses, while government bonds rose. The three-year note yield dropped six basis points to 2.99% and the 10-year yield was down one basis point at 3.68%, stock exchange prices show.

Bank Negara Malaysia lowered the overnight policy rate to 3% from 3.25%, joining Asian counterparts from Indonesia to Taiwan which have eased policy this year to bolster their economies. Goldman Sachs Group Inc was alone among the 18 economists surveyed that had projected the move.
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