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Emerging assets rise as China GDP meets forecasts

Kuala Lumpur - Emerging-market stocks and currencies rose for a second day as Chinese economic growth met estimates and on signs US monetary policy will remain accommodative.

South Korea’s won headed for its biggest two-day gain in almost a month as China reported 6.7% expansion in the third quarter, the same as in the previous two periods.

The Taiwan dollar rose the most in four weeks. The Philippine Stock Exchange Index climbed the most among Asian markets amid optimism President Rodrigo Duterte’s trip to China will lure more investment. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fell after Chinese industrial production figures missed estimates.

The Chinese data comes as a gauge of the dollar heads for its worst week in almost a month. The release of mixed US manufacturing data on Monday and then consumer prices excluding food and fuel costs that rose less than forecast on Tuesday are spurring speculation that even if the Federal Reserve raises interest rates this year, it will take a very gradual approach to future increases.

”The data is very much in line with what people expected, but it’s still positive news for Asian nations,” said Andrew Sullivan, managing director for sales trading at Haitong International Securities in Hong Kong. “So for anybody that’s exporting to China, this is good news because it means there will be demand.” 

Chinese factory production rose 6.1% in September from a year earlier, less than the 6.4% median estimate in a Bloomberg survey. Retail sales increased 10.4% year-to-date, compared with analysts’ forecasts for 10.3%. There’s a 63% chance the Fed will raise interest rates by December, futures contracts showed on Tuesday, down from 66% at the end of last week.

“China’s economy is showing further signs of stabilising,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “The slightly weaker read on industrial production is offset modestly by slightly better retail sales.”

Stocks

The MSCI Emerging Markets Index rose 0.3% as of 07:47 following a 1.6% jump on Tuesday. All but one industry gauge advanced, with a measure of real-estate equities surging 2.6%.

Indonesian coal miner PT Adaro Energy led gains on the measure, rising 5.9%, as thermal coal from Australia’s Newcastle port sold for $100 a metric ton for the first time in four years. Woori Bank advanced 5.9% in Seoul after reporting third-quarter net income that beat estimates.

The Philippine share gauge rose 1.8% after surging 2.9% on Tuesday. The gains are being driven by optimism President Duterte and his delegation, who arrived in China for a four-day visit on Tuesday, “will open new doors for more investments,” said Andrew Inovero, assistant vice president at Malayan Bank in Manila.

Taiwan’s benchmark share gauge climbed 0.7%, Thailand’s SET Index advanced 0.4% and the Shanghai Composite Index increased 0.1%. The Hang Seng China Enterprises Index fell 0.4% and the Jakarta Composite Index lost 0.2%, as did India’s S&P BSE Sensex measure.

Currencies, bonds

The MSCI Emerging Markets Currency Index climbed 0.2%, following a 0.4% advance on Tuesday. The Bloomberg Dollar Spot Index, which measures the greenback against 10 peers, was steady after falling 0.5% in the first two days of the week.

“Steady growth in China suggests stable growth in the Asia region,” said Ken Cheung, a foreign-exchange strategist at Mizuho Bank in Hong Kong. “Severe capital outflows from Asia are still unlikely because of this and expectations for a very gradual pace of US rate increases, despite a possible hike in December.”

The won strengthened 0.7% the Taiwan dollar gained 0.6% and the Thai baht advanced 0.2%. The onshore yuan climbed 0.03%, while Mexico’s peso weakened 0.2%. Malaysian sovereign bonds rose, pushing the 10-year yield down three basis points to 3.62%.

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