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Jakarta - Emerging-market stocks headed for the largest weekly gain since March and developing-nation currencies in Asia rose as China’s economic data beat estimates amid prospects for looser monetary policy worldwide.
Telecom and technology shares powered the MSCI Emerging Markets Index toward an eight-month high. A gauge of mainland Chinese companies traded in Hong Kong posted its best week in four months on signs the world’s second-biggest economy is stabilising.
Philippine stocks reached the highest level in 15 months and Taiwanese equities followed India to enter a bull market this week.
The Philippine peso and Korean won climbed, while currencies in South Africa, Russia and Turkey retreated amid declines in oil prices.
Emerging-market stocks are rising for a seventh day amid the highest valuations in more than a year as investors bid up shares on bets some of the world’s biggest economies will act to limit the fallout from Britain’s vote to leave the European Union.
Foreign funds have bought almost $4bn of equities this week in India, Indonesia, the Philippines, South Korea, Taiwan and Thailand, data compiled by Bloomberg show.
"The China data and expectations of more stimulus or measures to support the developed economies are basically positive for emerging assets, " Kim Kwie Sjamsudin, head of research at Yuanta Securities Indonesia, said in Jakarta.
"It will be a good year for emerging markets and investors should start to look for stocks that have been lagging the broader market."
The Bank of England signalled on Thursday that it’s readying stimulus for August after it kept interest rates unchanged, while a key adviser to Japan’s Prime Minister Shinzo Abe said former Federal Reserve Chair Ben S. Bernanke had floated the idea of perpetual bonds to stimulate Japan’s economy.
Stocks
The MSCI Emerging Markets Index added 0.3% to 868.23 at 9:05 a.m. in London, bringing gains in the past seven trading sessions to 6%. Its 14-day relative-strength index climbed to 66, near the 70 threshold that some traders see as a signal that a rally is about to reverse.
The developing-nations equity gauge has advanced 9.3% this year and trades at 12.3 times its 12-month projected earnings, the highest level since May 2015. The MSCI World Index has gained 2.5% and is valued at a multiple of 16.2.
Bull market
Eight out of 10 industry groups in the developing measure rose. Largan Precision jumped 9.9% in Taipei. The benchmark Taiex index climbed 0.9% to close more than 20% above a three-year low on August 24, as global investors poured cash into the island’s equities, drawn by upbeat earnings and high company dividends.
Samsung Electronics rose 1.2% to a three-year high in Seoul. The Korean company is in talks with BYD Co. about investing in the Chinese electric-car manufacturer. BYD jumped 5.2% in Hong Kong.
The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong increased 0.4%, taking gains this week to 6%, while the Shanghai Composite Index posted its third weekly advance.
China’s gross domestic product rose 6.7% in the second quarter from a year earlier, compared with a projection of 6.6% by economists Bloomberg surveyed and in line with the government’s growth target of at least 6.5% for the full year.
The data suggests the economy is responding to stepped up monetary and fiscal policy support. Speculation that policy makers will boost stimulus has underpinned equities in recent weeks, with mainland shares ranking among the world’s best performers since Britain’s June 23 vote to leave the European Union.
The Jakarta Composite Index climbed 0.4% after Indonesia’s June exports data came in better than economists estimated. Philippine shares rose for a sixth day, gaining 0.9%, while stock gauges in Malaysia and South Korea rose at least 0.4%.
Infosys tumbled 8.2% in Mumbai, the most since March 2014, after the Indian software exporter cut its annual sales forecast. The S&P BSE Sensex slid for the first time in five days.
The Sensex entered a bull market on Monday, rebounding 21% from a low reached in February.
Currencies, bonds
The MSCI Emerging Markets Currency Index was little changed Friday, set for a weekly advance of 1.1%. The won rose 0.4% on Friday to the highest level in two months, taking the gain this week to 2.5%, as strong inflows into local stocks boosted sentiment.
The Philippine peso added 0.5% and the Thai baht increased 0.3%. Malaysia’s ringgit retreated for the first time in five days.
"The market quickly digested the BoE decision yesterday and its impact to Asian currencies was limited," said Ken Cheung, an Asian currency strategist at Mizuho Bank in Hong Kong.
"The overnight US equity rally and stable China data further boosted sentiment."
The yield on Korean bonds due June 2026 rose three basis points to 1.40% while that on Malaysian notes due November 2026 climbed two basis points to 3.57%.
