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Kuala Lumpur - Emerging-market stocks rose to the highest level since November as trade data suggested Asia’s largest economy may avoid a hard landing, buoying the outlook for commodity prices.
The Hang Seng China Enterprises Index of mainland shares listed in Hong Kong climbed the most in eight weeks after a report showed Chinese exports beat estimates in March, while the Shanghai Composite Index closed at a three-month.
Russia’s ruble led currency gains and Malaysia’s ringgit strengthened for a sixth day to overtake Japan’s yen as Asia’s best performer this year.
The rebound in Chinese exports and a narrowing decline in imports spurred speculation the nation’s economy fared better than expected in the first quarter, with the gross domestic product numbers due on Friday.
A stabilisation in China would be another boost for emerging-market assets that are benefiting from a more than 60% increase in the price of Brent crude since mid-January. Whether the oil rally can be sustained will be dependent on the outcome of talks this weekend between major producers on freezing output.
“The stocks rally we have seen is primarily driven by the rebound in oil prices and indications the US will remain cautious in raising interest rates,” said Nescyn Presinede, a trader at Rizal Commercial Banking in Manila. “China’s export data is a sweetener, helping mitigate a sell-off in Chinese equities as it tempers sentiment of sharp slowdown.”
A stabilization in China will also aid the prices of commodities that are crucial for many developing nations. A Bloomberg gauge of raw-material prices has risen 11% since reaching a record low in January. Copper has advanced almost 11% from its 2016 low, while benchmark iron ore prices in China are up 36% this year.
Stocks
The MSCI Emerging Markets Index rose 1.3% as of 10:16, set for its fifth day of gains and heading toward its highest close since November 20.
All 10 industry groups advanced, led by energy and financial companies. South Korean markets are closed Wednesday for parliamentary elections.
China COSCO Holdings jumped 7.6% in Hong Kong to a three-month high, leading a rally in shipping stocks after China said exports increased 11.5% year-on-year in dollar terms March, compared with a 25.4% decline in February. Sinotrans advanced 9.6%, closing at the highest since January 19.
The Hang Seng China Enterprises Index of mainland companies trading in Hong Kong rose 4%, and the Shanghai Composite Index increased 1.4%. The FTSE/JSE Africa All Share Index advanced 2% in Johanesburg and Russia’s MICEX measure was up 1%.
Brazil’s Ibovespa gauge surged 3.7% on Tuesday, climbing to the highest level since July, on speculation President Dilma Rousseff is closer to impeachment.
Currencies, bonds
The MSCI Emerging Markets Currency Index rose 0.04%, taking its gain since April 6 to 1.2%. The measure has rallied 5.4% since the end of January and is now at the highest level since early August.
The ruble climbed 0.3% and the ringgit strengthened 0.2%, extending its 2016 advance to 11% . Turkey’s lira weakened 0.5% and the Czech koruna dropped 0.4%. The top three performers among the world’s 31 major currencies this year - Brazil’s real, the ruble and the ringgit - are all developing-nation commodity exporters.
“Commodity prices are holding well, so overall the whole commodity-currency complex has been doing well,” said Irene Cheung, a foreign exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “We may be seeing some signs of stabilization in China.”
The risk-on environment led to a decline in Chinese sovereign bonds, pushing the 10-year yield up three basis points to 2.94%. Indonesian debt rose, with the similar-maturity yield falling five basis points to a one-year low of 7.44%.
