Emerging-market (EM) stocks posted their longest stretch of gains in seven weeks as a recovery in oil prices supported energy companies. The South Korean won led gains in currencies.
A gauge of developing-nation energy stocks rose to a three- week high as Brent crude climbed to $37.89 a barrel. Cnooc and China Petroleum & Chemical Corp each added at least 2.3% in Hong Kong. The won strengthened for a fourth day after Moody’s Investors Service raised South Korea’s credit rating to the third-highest investment grade. South African equities rallied to the highest level since December 1.
Data this week showing strong US consumption and scant inflation are boosting confidence that the biggest part of the world’s largest economy will continue to underpin growth. That’s easing concerns that decelerating Chinese growth and the commodity slump will harm the global economy just as the Federal Reserve raises borrowing costs. Oil is heading for its first weekly gain this month, while the Bloomberg Commodity Index extended an advance after jumping by the most since October 6.
The gains are “a relief rally due to some year-end flows and portfolio rebalancings, helped by some signs of stabilisation in the commodity markets,” said Giorgio Bertoli, a money manager at Banca del Sempione in Lugano. “To sustain this advance into the next year we need better macroeconomics data, especially in China, and better price dynamics on commodity markets.”
The MSCI Emerging Markets Index added 0.1% to 804.06, rising for a fourth day. Six of 10 industry groups gained, led by energy and utility stocks. The measure’s 50-day volatility index, which peaked at a four-year high in October as a $5tn Chinese equity rout and concerns over the impact of a US interest-rate rise roiled developing markets, was near a five-month low.
“The rally in oil and commodity prices has significantly bolstered sentiment on emerging-market equities,” Isara Ordeedolchest, an investment strategist at SCB Securities Co in Bangkok, said by phone. “This is a positive development ahead of the coming holidays after those markets were hard hit by fund outflows and weak commodity prices.”
The developing-country index has fallen 16% this year, set for the worst annual performance since 2011 and pushing the average valuation of its companies to 11.1 times their projected 12-month earnings. The multiple for the MSCI World Index, which has fallen 2.1% this year, is 15.9.
The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong rose 0.7%. Markets in Hong Kong closed early Thursday, while Malaysia, Indonesia, Philippines and Sri Lanka were shut. Brazilian markets also were closed.
Goldin Properties Holdings, controlled bybnaire Pan Sutong, soared 54% after the company raised $2.8bn selling commercial properties. Goldin sold one-fourth of its flagship commercial project in the Chinese city of Tianjin. The Borsa Istanbul 100 Index was little changed. The FTSE/JSE Africa All Share Index climbed 1% as BHP Billiton advanced 2%. Markets in Poland and Hungary were closed.
A gauge tracking 20 emerging-market currencies rose 0.1%, trimming the measure’s annual loss to 14%, on course for the biggest yearly drop since 1997. Colombia’s peso appreciated 0.8% against the dollar. The Russian rouble fell 0.6%.
The offshore yuan strengthened 0.1% as the Chinese central bank’s decision to extend onshore market hours and allow in more foreign participants spurred optimism that demand for the currency will increase.
The yield on South Korea’s three-year sovereign debt held near a two-month low after the Bank of Korea said it will maintain an accommodative monetary policy in 2016 as uncertainties about economic growth remain high.