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London - Shares in emerging Europe and Africa rallied, offsetting declines in Asia, as a rebound in oil prices helped ease the worst weekly rout in developing-country assets in a month.
The MSCI Emerging Europe, Middle East and Africa Index advanced 1.4%, led by Naspers. in Johannesburg.
Polish and South African equities climbed for the first time this week. Chinese shares traded in Hong Kong slumped to the lowest in almost seven years as markets across Asia retreated, following a decline in world equities into a bear market on Thursday. Russia’s ruble and the Chilean peso advanced against the dollar and bonds in emerging Europe gained.
The selloff that dragged the MSCI Emerging Markets Index down 3.8% this week eased on Friday as oil advanced 5.1% in London on signs OPEC is willingto engage with other producers, and data showed the euro-area economy grew at the end of 2015. Sentiment toward riskier assets had soured on skepticism that central banks can arrest the slide in the world economy, while Federal Reserve Chair Janet Yellen indicated the US won’t rush to raise interest rates again.
"Gains in commodity prices and decent data from the euro- area are helping create more appetite for risk in emerging Europe,” said Michael Wang, a strategist at hedge fund Amiya Capital in London. “I’m not so sure sentiment will hold given that Yellen didn’t really provide many clues that the Fed will provide policy support any time soon.”
The MSCI Emerging Markets Index fell 0.3% to 711.04 by 12:23 p.m. in London, while a gauge tracking 20 developing- nation currencies was little changed. The premium investors demand to own emerging-country debt over US. Treasuries narrowed six basis points from the highest in almost seven years to 501, according to JPMorgan Chase & Co. indexes.
Stocks
The MSCI measure capped its steepest weekly loss since the period ended January 15. Six of the gauge’s 10 industry groups declined on Friday, led by health-care and industrial companies, while energy stocks ended a five-day selloff.
The broader index is down almost 10.5% this year, pushing the average valuation of its members to 10.5 times estimated 12-month earnings, compared with a multiple of 14 for the MSCI World Index, which is down 12% in 2016.
Declines today were steered by Asia, where South Korea’s Kospi completed its biggest weekly drop since August, while the Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong fell to lowest close since March 2009. Markets in mainland China, Taiwan and Vietnam remain closed for Lunar New Year holidays.
South Africa’s FTSE/JSE Africa All Share Index added 2.4% as Naspers climbed 2.3%. Russia’s Micex Index gained 0.7%, supported by the rebound in crude. That trimmed its weekly loss to 3.1%. Turkish shares rose 0.6%, and stock indexes in Hungary and Poland advanced at least 0.6%.
Currencies
A Bloomberg’s index of 20 developing-nation currencies retreated 0.6% this week, bringing losses for 2016 to 1.4%.
The ruble strengthened 0.3 to 79.372 per dollar. The exchange rate’s three-month implied volatility has soared to the highest level since May last year as it tracked swings in the price of Russia’s main export earner. Central bank First Deputy Governor Dmitry Tulin said policy makers may act to counter currency volatility that’s a result of market “imperfections."
Latin American currencies also gained on Friday, while those in Asia fell. The Chilean peso strengthened 0.5% versus the dollar, leading gains among 23 developing-country peers, while the Thai baht was the biggest loser in the group.
Bonds
Hungarian bonds were the best performers in emerging Europe, with yields on 10-year debt falling six basis points to 3.48%. Similar-maturity bonds in Poland yielded 3.05%, capping a seven basis-point weekly decline.
Malaysia’s sovereign bonds rose, with the 10-year yield falling 13 basis points to 3.92%, prices from Bursa Malaysia show.
