Emerging Stocks Rise to One-Month High on Stimulus Bets

Emerging-market stocks rose to a four-month high after Chinese Premier Wen Jiabao said the nation has room to boost stimulus and a German court paved the way for a permanent rescue fund to combat Europe’s debt crisis.
The MSCI Emerging Markets Index (MXEF) grew 0.8 percent to 981.08 as of 10:54 a.m. in London, climbing for a fifth day. Anhui Conch (914) Cement Co. jumped 4.8 percent in Hong Kong, leading a rally in construction-related companies. Hon Hai Precision Industry Co. (2317) paced gains among Apple Inc. suppliers before the world’s largest company by market value unveils its new iPhone. Equity gauges in South Africa (JALSH), the Czech Republic and Poland increased, while Russia’s ruble strengthened for a seventh day.
China still has “ample strength” to use monetary or fiscal policy to boost growth in the biggest emerging economy, Wen said yesterday. Germany’s top constitutional court rejected bids to halt the nation’s ratification of the 500 billion-euro ($644 billion) rescue fund today. The U.S. Federal Reserve begins a two-day policy meeting today amid speculation they will announce a third round of asset purchases to boost the economy.
“Given that the U.S. and China are the world’s two largest economies, any measures are positive signs for the global economy,” said Vu Thanh Tu, the Ho Chi Minh City-based head of research at Viet Capital Securities. “Emerging markets, particularly those that have export-driven growth models, could see a greater boost.”
Export Markets
The 21 countries in MSCI Inc.’s developing nations gauge send about 13 percent of their exports to the U.S. on average and 30 percent to the European Union, according to data compiled by the World Trade Organization.
The MSCI index extended this year’s gain to 7 percent and is poised to close at the highest level since May 8. Its five- day stretch of gains is the longest in a month. The MSCI World Index of advanced-nation shares has gained 11 percent this year.
The Hang Seng China Enterprises Index (HSCEI) advanced for the first time in three days, rising 1.2 percent. South Africa’s FTSE/JSE Africa All Shares Index increased 0.8 percent and the Czech PX index added 0.7 percent. Poland’s WIG20 increased 0.2 percent. The ruble strengthened 0.9 percent against the dollar as oil prices advanced for a fifth day in London.
The Markit iTraxx SovX CEEMEA Index of east European, Middle Eastern and African credit-default swaps declined four basis points, or 0.04 percentage point, to 202, the lowest level on an intraday basis since July 2011. The extra yield investors demand to own emerging-market bonds over U.S. Treasuries declined five basis points to 291, according to JPMorgan Chase & Co.’s EMBI Global Index.
Wen Speaks
Germany’s Federal Constitutional Court dismissed motions filed by groups including a conservative lawmaker and an opposition political party that sought to block the rescue fund, known as the European Stability Mechanism, and a deficit-control treaty championed by Chancellor Angela Merkel.
The court stipulated that a cap of about 190 billion euros be set on German liabilities before ESM ratification, unless parliament decides to back extra funds.
Anhui Conch, China’s biggest supplier of cement, climbed to the highest level since June 20. Zoomlion Heavy Industry Science & Technology Co., China’s second-biggest maker of construction equipment, advanced 2.6 percent. China Coal Energy Co., the nation’s second-largest coal producer, rose 2.4 percent.
“Be it monetary or fiscal, we still have ample strength,” Wen said at the World Economic Forum in Tianjin yesterday. A fiscal stabilization fund of 100 billion yuan ($16 billion) is available for “preemptive” measures, he said.
iPhone Boost
Morgan Stanley today became at least the fifth bank to estimate that China’s economic growth this year will be 7.5 percent, the same as Wen’s target and the weakest pace in 22 years, after imports slid in August and industrial production cooled.
Hon Hai (AAPL), the world’s largest contract manufacturer of electronics, rose 2.9 percent to the highest level since April 26. Apple is expected to introduce a redesigned iPhone at an event in San Francisco today.
AirAsia (AIRA) Bhd., Asia’s biggest discount airline, tumbled 5.3 percent in Kuala Lumpur, the most since November. Malindo Airways, backed by Indonesia’s PT Lion Mentari Airlines, will sell tickets at prices matching “or maybe lower” than AirAsia’s, the company said yesterday.
Anglo American Platinum Ltd. (AMS), the largest producer of the metal, declined 3 percent in Johannesburg. The company said it diverted employees at its Rustenburg operations away from the mine after unidentified people prevented some workers from entering shafts last night.