BackEmerging stocks rise to 18-month high as Chinese shares surge
The developing-nation gauge has risen 7.5% this year and trades at 11.2 times 12-month projected earnings, data compiled
Premium
Kuala Lumpur: Emerging-market stocks headed for an 18-month high as investors bet China will accelerate measures to boost the housing market. The rupiah surged to a two-month high after Joko Widodo was named Indonesia’s next president.
China Resources Land Ltd. led gains for developers as a Hong Kong-traded Chinese gauge erased this year’s declines. Russian shares rose 0.8%, paced by OAO Magnit, while the ruble posted the biggest two-day gain in two weeks versus the dollar. The rupiah was poised for the strongest level since 21 May. Turkey’s lira and South Africa’s rand added 0.5%.
The MSCI Emerging Markets Index rose 0.4% to 1,079.06 at 9:02 am in London, its second day of gains. The Hang Seng China Enterprises Index has rebounded 18% from a March low as China accelerated railway spending, allowed some local governments to loosen property curbs and cut reserve- requirement ratios for smaller banks. Widodo said he’s aiming for a growth pace Indonesia hasn’t seen since before the 1997 Asian financial crisis.
Money is coming back to the region, Manpreet Gill, a senior investment strategist at Standard Chartered Bank, said by phone in Singapore. We are progressing beyond risks we highlighted earlier in the year like in Indonesia and India, he said, referring to election uncertainties in those countries.
The developing-nation gauge has risen 7.5% this year and trades at 11.2 times 12-month projected earnings, data compiled by Bloomberg show. The MSCI World Index gained 5.5% and is valued at a multiple of 15.1 times.
Developers rally
Eight out of 10 industry groups in the MSCI Emerging Markets Index rose, led by industrial and financial companies. The Hang Seng China Enterprise Index jumped 2% to the highest close since December. China Resources Land rallied 7.5%, the most since December 2011, while Shimao Property Holdings Ltd. surged to a three-month high.
A Bloomberg News survey showed that banks will probably offer discounted mortgage rates to their clients in the second half of 2014. Sina.com reported on Wednesday that Haikou has become the latest city to relax home-purchase restrictions. Cities such as Hohhot in northern China and Jinan in the east have already loosened property curbs.
The government may engage in monetary easing and support the housing market, said Benjamin Tam, a fund manager who helps oversee about $1.5 billion at IG Investment Management (Hong Kong) Ltd. People are still optimistic that the government policies will support growth in China.
Magnit surges
The Micex Index rose for a second day, led by a 4% surge in food retailer Magnit after its second-quarter profit surged 49%. The gauge also climbed after the European Union delayed the announcement of a new list of sanctions.
The EU may restrict Russia’s access to capital markets and to sensitive energy and defense technologies unless President Vladimir Putin expedites the investigation into the downing of the Malaysian Air flight over eastern Ukraine. The widened EU list will be announced on 24 July.
The lira climbed 0.5% and Turkey’s equity gauge headed for the highest close since May 2013. Indonesia’s rupiah added 0.8% and the Jakarta Composite Index pared gains to 0.2%.
Widodo, known as Jokowi, garnered 53.15% of support at the 9 July vote, while Prabowo won 46.85%, the election commission said late Tuesday. Prabowo called the voting undemocratic and pulled his witnesses from the counting process just hours before the final result was announced.
Thailand’s SET Index rose 1.1%, the most since 16 June. Taiwan market was closed because of a typhoon. Lotte Confectionery Co. jumped 8.1 % in Seoul, the largest advance in the developing-nation gauge, after Lotte Group’s move to unwind its crossholdings. BLOOMBERG
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
