China Leads Emerging-Stock Rebound From 2013 Low as Ruble Gains

04/08/2015 15:35 AST

Emerging-market stocks climbed from a two-year low as Chinese equities surged after authorities stepped up measures to stabilize the market. Russia’s ruble led currencies higher, while the Micex Index rose as Brent rebounded.

The Shanghai Composite Index jumped 3.7 percent. Equities in Turkey advanced for the fifth time in six days and stocks in Moscow headed for their highest close since May. The ruble gained 1.1 percent versus the dollar, the most among its peers, while the lira added 0.3 percent.

The MSCI Emerging Markets Index increased 0.3 percent to 893.43 at 11:20 a.m. in London. Chinese regulators restricted short selling of stocks, the latest measures to prop up share prices and prevent market manipulation after an almost $4 trillion selloff. The Bloomberg Commodity Index rebounded from a 2002 low, halting a three-day decline.

“The news that some of the biggest brokers have banned short selling is helping the sentiment in Shanghai,” Hertta Alava, who helps oversee 350 million euros ($384 million) as the head of emerging markets at FIM Asset Management Ltd. in Helsinki, said by e-mail. “There is some rebound in commodity names after weakness yesterday.”



China Rebound

The Shanghai Composite climbed from a three-week low as volatility jumped to the highest level since 2009. Investors who borrow shares must now wait one day to pay back loans. Some Chinese brokerages including Citic Securities Co. halted their short-selling businesses after the regulators’ move.

Hong Kong’s Hang Seng China Enterprises Index gained 0.6 percent. Six out of 10 industry groups in MSCI’s emerging-markets measure rose, led by health-care and consumer companies. A gauge tracking developing-country currencies added 0.2 percent after a three-day loss.

The ruble climbed for the first time in four days after falling to the lowest level since February on Monday as oil surged 1.6 percent and Citigroup Inc. lifted the nation’s currency and debt to neutral from underweight.

Brent traded near $50 a barrel after reaching a six-month low amid speculation Iranian supplies will exacerbate a global surplus as demand from the U.S. to China slows. Russia derives about 50 percent of its revenue from crude and gas.

The lira strengthened the most since July 21. Turkey’s central bank is due to publish its evaluation of inflation after data yesterday showed the rate falling below 7 percent for the first time in two years. The benchmark Borsa Istanbul 100 Index gained as much as 0.8 percent. South Korea’s Kospi index rose 1 percent as Korean Air surged 11 percent, the most since October 2008.

MSCI’s developing-nation gauge has declined 7.2 percent this year and trades at 11.2 times projected 12-month earnings, data compiled by Bloomberg show. That compares with a multiple of 16.4 for the MSCI World Index, which has risen 2.9 percent.

The premium investors demand to hold emerging-market debt over U.S. Treasuries narrowed two basis points to 372, according to JPMorgan Chase & Co. indexes.

Bloomberg