Emerging-market stocks rose for a third day amid bets that South Korea and China will take steps to support economic growth. India’s rupee weakened after the nation’s inflation topped estimates.
Amorepacific Corp. (090430) rallied to a record in Seoul and the Kospi index surged 1 percent amid speculation that South Korea will cut interest rates. The Shanghai Composite Index (SHCOMP) erased losses as investors weighed prospects for stimulus after disappointing economic data. Russian shares extended gains for a fourth day. The ruble weakened for a second day versus the dollar. South Korea’s won and India’s rupee slid 0.3 percent.
The MSCI Emerging Markets Index added 0.5 percent to 1,069.43 at 9:13 a.m. in London. The Bank of Korea will cut its benchmark interest rate tomorrow for the first time since May 2013, according to most analysts surveyed by Bloomberg. China’s broadest measure of new credit unexpectedly plunged to the lowest level since
the global financial crisis, adding to growth risks in the world’s second-biggest economy. India’s inflation quickened to 7.96 percent in July.
“China’s weak data strengthens the outlook that the government will do all it can to stimulate economic growth,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. “Globally, financial markets remain very liquid and that’s keeping things buoyant.”
The emerging-markets gauge has risen 6.6 percent this year and trades at 11.2 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has gained 2.3 percent and is valued at a multiple of 14.7 times.
Consumer Rally
Nine out of 10 industry groups in the developing-nation measure rose, paced by consumer staples stocks. Cosmetics maker Amorepacific surged 4.4 percent after IBK Securities Co. and Samsung Securities Co. increased their price targets.The Kospi climbed the most in two months while the won halted a three-day gain as investors weighed the prospect of a rate cut to revive growth. The government last month lowered its 2014 growth forecast and unveiled a 11.7 trillion won ($11.4 billion) spending plan.
The SET Index (SET) jumped 1.2 percent, halting a three-day loss as Thailand’s financial markets reopened after being shut the previous two days for public holidays. Templeton Emerging Markets Group’s Mark Mobius said on Aug. 11 he remained bullish on the nation’s equities and that the country will “survive another time” even after its 12th military coup since 1932.
Coal Stocks
The Shanghai Composite Index climbed 0.1 percent, as Guizhou Panjiang Refined Coal Co. and Wintime Energy Co. both rallied 10 percent after the nation’s second-largest coal miner said it was cutting production. Bank of Communications Co. and China Citic Bank Corp. slid at least 0.9 percent.The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong rebounded 1.2 percent.
Aggregate financing was 273.1 billion yuan ($44.3 billion) last month, the People’s Bank of China said today, compared with the 1.5 trillion yuan median estimate of analysts. New local-currency loans were half of projections. Growth in industrial output also trailed estimates.
The Micex Index rallied 0.8 percent as energy stocks OAO Lukoil and OAO Gazprom rose more than 1 percent. OAO Rostelecom added 2.1 percent to the highest level since February.
Naspers Ltd. sank 1.9 percent in Johannesburg, halting a three-day rally. Its debt rating was cut to junk by Fitch Ratings because of a deterioration in the profitability of Africa’s largest media company.
The rupee weakened the most since Aug. 6. India’s consumer-price inflation quickened more than economists estimated, adding pressure on central bank Governor Raghuram Rajan to keep interest rates elevated even after factory output slowed.
The S&P BSE Sensex index lost 0.2 percent, halting a two-day increase. Bharat Heavy Electricals Ltd. and Jaiprakash Associates Ltd. tumbled at least 8 percent after their earnings trailed estimates.
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