Emerging-market stocks rose from the lowest level since 2011


Shanghai – Emerging-market stocks rose from the lowest level since 2011 and Asian currencies rebounded after China’s central bank signaled support for the yuan.

Tencent Holdings rallied 6.8 percent after China’s second-largest Internet company posted record quarterly profit. Naspers , which owns a stake in Tencent, jumped 8.3 percent in Johannesburg. Indonesian shares surged 2.3 percent to halt a five-day slump. The Shanghai Composite Index gained 1.8 percent. South Korea’s won added 1.4 percent and Malaysia’s ringgit rose from a 1998 low. Turkey’s lira slid 0.4 percent.

The MSCI Emerging Markets Index increased 0.7 percent to 868.04 at 9:06 a.m. in London, halting a two-day loss. The gauge entered a bear market earlier this week after falling more than 20 percent from a September peak. China’s surprise move on Tuesday to devalue the yuan rattled global markets and raised bets that developing nations will weaken their currencies to stay competitive. The People’s Bank of China said it supports a strong, stable yuan in the long term.

“The yuan devaluation has given rise to a need to re- evaluate our portfolio mix,” Geoffrey Ng, director at Fortress Capital Asset Management Sdn. in Kuala Lumpur, which oversees about 1 billion ringgit ($250 million), said by phone. “We are picking up stocks which potentially would benefit from weaker currencies, and selling down some.”

PBOC comments

There’s no basis for depreciation to persist, PBOC Assistant Governor Zhang Xiaohui said Thursday at a briefing in Beijing. The PBOC will act “when the market’s volatility is excessive, when the market begins behaving like a herd of sheep,” Deputy Governor Yi Gang said.

The yuan slid 0.5 percent in Shanghai after a two-day loss of 2.8 percent following a devaluation on Tuesday.

MSCI’s developing-nation stock index has fallen 9.2 percent this year and trades at 11.1 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has added 2.1 percent and is valued at a multiple of 16.2.

Nine out of 10 industry groups in the emerging-market index rose, led by a 1.9 percent gain in gauges of technology and consumer shares. Tencent surged the most since July 9 and Naspers rebounded from its steepest drop since April 2014. South African shares gained 1.6 percent.

Rupiah rebounds

The Jakarta Composite Index climbed the most since March 2014 as the rupiah rose from the weakest level since 1998. The FTSE Bursa Malaysia KLCI Index advanced 0.9 percent, halting a five-day drop. The ringgit strengthened 0.4 percent, its first gain in seven days.

Malaysia’s gross domestic product rose 4.9 percent last quarter from a year earlier, more than the 4.5 percent median estimate in a Bloomberg survey, data showed on Thursday. That’s still the slowest since the third quarter of 2013.

The Shanghai Composite climbed for the first time in three days and Hong Kong’s Hang Seng China Enterprises Index added 0.3 percent. Vietnam’s VN Index dropped 1.7 percent and Thailand’s SET Index lost 1.3 percent.

Russia’s Micex index advanced 0.4 percent and the ruble added 0.1 percent as oil extended gains after rebounding from a six-year low.

The lira weakened for a second day in three and Turkey’s Borsa Istanbul 100 Index declined 1.2 percent. Prime Minister Ahmet Davutoglu and the leader of the main opposition party plan to say whether they have enough common ground to form a government after an inconclusive general election in June.

BLOOMBERG

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