Emerging stocks gain for 3rd day after payrolls beat forecasts

Jakarta - Emerging-market stocks advanced for a third day after a better-than-expected US jobs report on Friday boosted the outlook for global economic growth.

A gauge of developing-nation equities headed for its highest close since August 2015 with Thailand and South Korea leading gains in Asia.

Thailand’s stocks and currency advanced after voters approved a military-backed constitution, a first step toward restoring democracy in the Southeast Asian nation.

Korean stocks rallied after S&P Global Ratings raised the country’s credit ranking.

"The payroll data signal recovery in spending power and the overall US economy, and that’s driving positive sentiment," said John Teja, a director at PT Ciptadana Securities in Jakarta.

"The market is still driven by data for now. As long as we have enough positive data to maintain the momentum, the upside trend could stay. But I think we are still prone for corrections."

Stocks

The MSCI Emerging Markets Index of shares jumped 0.8% as of 7:34 a.m. in London, set for its highest close since August 4, 2015.

The gauge has risen 12% this year, compared with a gain of just 3.5% for the MSCI World Index of developed-market equities.

All 10 industry groups advanced on Monday, led by industrial companies and financials.

China Communications Construction Company rose 5.6% in Hong Kong, while Kasikornbank gained 4.7% in Bangkok.

Thailand’s benchmark stock index gained 1.1%, set for the highest close since April 2015, after voters approved a new military-backed constitution in the first ballot since a coup two years ago.

The baht strengthened 0.4%.

The passing of the charter means the junta, which has boosted public spending in an attempt to spur economic growth, is more likely to stick to its current timeline of holding elections by late 2017.

Korean stocks rallied after S&P raised the country’s credit rating by one level to AA, citing steady economic growth and adding it expects geopolitical risks to be contained. The benchmark Kospi index gained 0.4%.

"Korea has exhibited stronger economic performance in recent years than most other high-income economies" S&P said in a statement.

"The Korean economy remains well-diversified and is not dependent on a particular industry or export market."

The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong rose 1.1% while the Shanghai Composite Index added 0.7%.

The Jakarta Composite Index climbed 0.4% to a 15-month high after foreign investors boosted their holdings of Indonesian stocks by $583m last week.

Currencies

The MSCI Emerging Markets Currency Index rose 0.1% after gaining 0.6% last week. The gauge trimmed gains on Friday when the US payroll report boosted bets the Federal Reserve will raise interest rates this year, helping the dollar.

Traders raised the probability to 47% of a move by December, from 37% odds before the job data, according to data compiled by Bloomberg based on Futures.

US employers added 255 000 workers in July, exceeding all forecasts in a Bloomberg survey of economists.

The Taiwan dollar and Philippine peso both appreciated 0.2%. Malaysia’s ringgit weakened 0.4%.