Emerging Stocks Head for Longest Rally in Decade as China Surges

13/04/2015 10:41 AST

Emerging-market stocks headed for the longest winning streak in 10 years as a surprise slump in Chinese exports spurred bets that the government will increase stimulus to support growth. Malaysia’s ringgit weakened.

The Shanghai Composite Index climbed to the highest level in seven years. The Hang Seng China Enterprises Index rallied for an eighth day. China Merchants Bank Co. soared 19 percent in Hong Kong to lead lenders higher after announcing an employee stock incentive plan. The ringgit sank 1.1 percent versus the dollar, while South Korea’s won slid for a fifth day.

The MSCI Emerging Markets Index advanced 0.2 percent to 1,036.72 at 1:41 p.m. in Hong Kong, poised for an 11th day of gains, the longest stretch of increases since January 2005. Data Monday showed China’s exports unexpectedly slumped by 14.6 percent in March, compared with the median estimate for an 8.2 percent rise in a Bloomberg News survey. “The falling exports data has raised concerns among investors about China’s outlook but it also fueled bets that the government may provide additional stimulus to support growth,” Akbar Syarief, a fund manager at PT MNC Asset Management, said by phone from Jakarta. The developing-nation gauge has risen 8.5 percent this year and trades at 12.4 times 12-month projected earnings, the most expensive since 2010, data compiled by Bloomberg show. The MSCI World Index has gained 3.9 percent in 2015 and is valued at a multiple of 17.

China Rally

The Shanghai Composite Index rose 1.7 percent, on course for its highest close since March 2008. A gauge of foreign-currency traded shares in Shanghai headed for its biggest two-day gain in nine years.

The Hang Seng China Enterprises gauge of mainland shares traded in Hong Kong advanced 2.6 percent, set for its highest close since May 2008.

China Merchants Bank was poised for its highest close since December 2007. The company said it will raise as much as 6 billion yuan ($967 million) in a private placement to no more than 8,500 employees.

Six out of 10 industry groups in the developing-nation measure increased, led by industrial and health-care stocks. Hyundai Development Co-Engineering & Construction jumped 7.4 percent and Hotel Shilla Co. surged 15 percent after they agreed to a joint venture to build South Korea’s biggest duty-free store in Seoul. The Kospi index climbed 0.5 percent, poised for the highest close since August 2011.

The ringgit weakened for a third day, while the won slid 0.5 percent. Vietnam’s VN Index rose 0.9 percent and Taiwan’s Taiex Index added 0.4 percent. The Jakarta Composite Index and the Philippine Stock Exchange Index lost at least 0.6 percent.

Bloomberg