Share

Emerging stocks advance as Apple suppliers rally

Jakarta - Emerging-market stocks climbed for a second day as a rally in technology companies drove Taiwanese equities to the biggest gain in eight months and shares from China to Hungary advanced. Russia’s ruble weakened with oil.

The MSCI Emerging Markets Index extended Friday’s gain from a two-month low. The Taiex index led advances as Apple vendors such as Taiwan Semiconductor Manufacturing surged. The Shanghai Composite Index climbed with volatility plunging to 15-month lows.

Hungarian equities were higher and 10-year government bonds rose after Fitch Ratings upgraded the nation’s credit. South Korea’s won led most currencies higher, while the ruble slid for a fourth day.

Developing equity markets are rebounding from last week’s selloff caused by rising expectations for higher US borrowing costs.  Odds of an interest-rate increase next month are now at 28%, up from 4% a week ago.

Federal Reserve policy makers indicate a hike in June would be likely if the economy continues to improve. John Williams, president of the Fed Bank of San Francisco, said Sunday on Fox News the US economy should be solid enough to merit raising rates in 2016.

“I think the gains we are seeing today are only a technical rebound after the recent selloff,” John Teja, a director at PT Ciptadana Securities, said by phone from Jakarta.

“The concerns among investors remain and the risk for Federal Reserves to raise its rate in June is still there.” He recommended investors stay defensive and seek good quality companies that have fallen in the recent selloff.

Equity valuations

The MSCI Emerging Markets Index added 0.7% to 791.05 at 10:07. A 8.4% slide from this year’s peak in April through Thursday had pushed the gauge’s 14-day relative strength index to 29.3, below the threshold of 30 that signals to some analysts that an asset has fallen too much.

The MSCI measure is down 0.4% this year and trades at 11.3 times its projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has dropped 1.3% in 2016 and is valued at a multiple of 15.8 times.

Nine out of 10 industry groups in the developing-nation index gained, as a measure of technology companies rallied 1.9%. The Taiex jumped 2.6% amid speculation the inauguration of the island’s president won’t disrupt the trade relationship with China and Apple orders for the iPhone 7 will be higher than estimated.

Stocks

Apple vendors Taiwan Semiconductor and Hon Hai Precision Industry were the biggest contributors to the gains after the iPhone maker asked suppliers to prepare production for a new version of its smartphone, according to an Economic Daily News report.

Other suppliers Pegatron and Catcher Technology jumped almost 10%.

The Shanghai Composite advanced 0.6% as investors rotated to companies least exposed to China’s industrial economy, including consumer-staples producers and technology companies.

Price swings in the benchmark gauge slumped to the lowest levels since March 2015 and interest in trading continued to dwindle. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong advanced 0.1%.

Hungary’s BUX Index added 0.9%. Fitch Ratings lifted Hungary’s long-term rating one step from junk to BBB- on Friday, citing the country’s current-account surplus and falling external debt.

Equity indices in Indonesia and South Korea gained at least 0.4%. Stock gauges in Saudi Arabia, South Africa and Russia sank at least 0.7%.

Oil slid below $48 a barrel as producers in Canada started the process of resuming operations after wildfires crimped output and as Iran continued to boost exports amid a glut.

Currencies

The won strengthened 0.6% on speculation exporters are exchanging their dollars at a more competitive rate after the local currency weakened beyond 1 190 last week.

The rand advanced 0.6%, while the Taiwanese dollar and Indonesia’s rupiah were up at least 0.2%. The rouble weakened 0.5%.

“There is a bit of dollar weakness and the yen is strong today, so that is helping Asian currencies,” said Nizam Idris, head of foreign-exchange and fixed -income strategy at Macquarie Bank. “And a lot of it is unwinding of some of the long dollar trades we saw last week.”

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders