Emerging-market stocks rose for a sixth day, sending the global benchmark index to a seven-month high, as rising commodities lifted energy and mining shares and China said its economy performed “better than expected” last quarter.
The MSCI Emerging Markets Index advanced 1.2 per cent to 712.38 in afternoon trade in London, bringing its six-day gain to 14 per cent. Russia’s Micex index increased 3.5 per cent and South Africa’s FTSE/JSE Africa All Share Index added 2.6 per cent as oil’s gain above $54 a barrel boosted OAO Lukoil and Sasol. Jiangxi Copper jumped to an eight-month high in Hong Kong as prices for the metal climbed in Asia.
The MSCI index, a benchmark for equities in 23 developing nations, has increased 46 per cent in the past two months on signs that increased lending and investment in China, along with US plans to shore up banks, are easing the global recession. “The huge stimulus in China will be successful,” said Philippe Langham, a London-based emerging-markets money manager at GLG Partners, which oversees more than $15 billion. “This rally could continue for much longer than people expect.” The MSCI index climbed to its highest level of the day after a US industry report showed private employers cut fewer jobs than economists had estimated in April, spurring speculation that the labor market is improving.
The extra yield investors demand to own emerging-market bonds instead of US Treasuries slid 13 basis points to 4.88 percentage points, according to JPMorgan Chase.
Twelve of the 17 markets in the MSCI equity index that were open for trading climbed today. China’s Shanghai Composite Index increased 1 per cent to an almost nine-month high, while Thailand’s SET Index added 3.3 per cent for the top gain of Asian emerging markets. South Africa’s rand led a slide in emerging-market currencies against the dollar, weakening as much as 1.8 per cent after a report showed house prices slumped the most in more than two decades. The dollar strengthened as concern US regulators will say Bank of America Corp. needs $34 billion in new capital spurred traders to seek safety in US Treasuries. Lukoil, Russia’s second-largest oil producer, added 4.2 per cent in Moscow trading and Sasol, the Johannesburg-based oil and gas producer, climbed 4.9 per cent.
Crude oil advanced as much as 3.4 per cent to $55.68 a barrel in New York after the American Petroleum Institute said stockpiles of crude and gasoline fell last week in the US, the world’s largest energy consumer.
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China’s central bank pledged to keep money flowing into the financial system to sustain growth in the world’s third-largest economy.
The People’s Bank of China will ensure an “ample” supply of money, it said in a quarterly monetary-policy report posted on its Web site today. New lending surged sixfold to a record in March as banks supported the government’s 4 trillion yuan ($585 billion) stimulus package.
“The tone of the economy in China is very good,” said Richard Titherington, who helps oversee more than $10 billion as the London-based head of the emerging markets desk at JPMorgan Asset Management. “People are already talking about recovery from the economic slowdown of the last six months.”