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Jakarta - Emerging-market stocks extended a weekly advance, as energy companies rallied with oil, with investors speculating that the new head of China’s securities regulator will take measures to bolster the world’s second-largest equity market.
The MSCI Emerging Markets Index rose toward the 50-day moving average after surging 4.2% last week. A gauge of shares in the oil-exporting Gulf Cooperation Council climbed to a six-week high.
The Shanghai Composite Index jumped to a one- month high and China Life Insurance paced gains for mainland shares traded in Hong Kong. The rouble strengthened for the first time in four days in holiday trading, with a Bloomberg gauge tracking 20 developing-nation currencies poised to end a two-day loss.
Developing-nation equities resumed gains, rising for a fifth day in six, as oil’s rebound and a rally in China helped revive sentiment on riskier assets. Liu Shiyu, previously chairperson of Agricultural Bank of China, takes over as chairperson of the China Securities Regulatory Commission from Xiao Gang, who was removed from his post on Saturday in the wake of last summer’s $5trn rout that reverberated across global financial markets.
Brent crude rose as Russia said talks on an output freeze will be done by March 1, while Nigeria said some countries should have production capped at higher levels.
“China is a critical market for global investors, so the appointment is seen as a move by the government to create a more transparent market,” Indra Mawira, investment manager at Panin Asset Management, said by phone from Jakarta. “I would stay cautious on this development,” he said, adding that he will continue to build up positions if there are corrections in the market.
The MSCI Emerging Markets Index added 0.5% to 744.83 at 8:10 a.m. in London. The benchmark gauge has declined 6.2% this year and trades at 10.9 times the projected 12- month earnings of its member stocks.
That compares with a multiple of 14.9 for developed-nation equities, which have fallen 7.4% in 2016.
Nine out of 10 industry groups in the developing stocks index rose, led by energy companies. Reliance Industries, operator of the world’s biggest oil-refinery complex, climbed 2.4% in Mumbai. Brent crude futures rose as much as 1.9% after dropping 4.3% over the previous two sessions. The Bloomberg GCC 200 Index of shares in the oil- exporting Gulf Cooperation Council increased 0.5%.
Stocks
China Life gained 3.6% in Hong Kong as the Hang Seng China Enterprises Index increased 1.3%. The Shanghai Composite jumped 2.3%, halting a two-day loss. Developers gained after the government said it will cut taxes on home transactions.
Liu assumes oversight of the China’s stock market in the wake of last summer’s slump that saw Xiao criticized for mismanagement. The reshuffle comes before the nation’s Communist leaders meet next week to set out a new five-year economic plan.
Alibaba Health Information Technology plunged 14% in Hong Kong, the biggest decliner in MSCI’s developing- nations measure, after China said it will halt the implementation of a drug-coding system that’s developed and operated by the company.
Equity gauges in Abu Dhabi and Dubai rose at least 1.9%, while Turkish shares advanced 1.3%. Vietnam’s VN Index increased 1.2%, the highest level since January 12. India’s S&P BSE Sensex added 0.6%, its fourth day of gains, set for the longest winning streak since December.
Currencies
The rouble strengthened 1.1% and South Africa’s rand climbed 0.4%. Indonesia’s rupiah rose 0.4% after a central bank official said the cut in lenders’ reserve requirements will add 165trn rupiah ($12.3bn) of potential capital for economic development. Malaysia’s ringgit added 0.2%.
The yield on Taiwan’s five-year notes climbed three basis points, the most since October, to 0.57% after a sale of two-year government bonds fell short of target. Expectations for another rate cut have already been priced in and the gains from buying such low-yielding short-end debt in a carry trade are unattractive, said Daniel Wu, a trader at EnTie Commercial Bank in Taipei.
Yuan forwards rose for a second day on speculation Chinese policy makers will support the currency before a meeting of the Group of 20 central bankers and finance ministers. Officials from the world’s biggest economies meeting in Shanghai on February 26 and 27 will discuss the recent turmoil in China’s markets and ways to bolster a safety net for the global financial system, according to officials familiar with the agenda for the talks.
