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Kuala Lumpur - Emerging-market stocks rose to the highest level in almost three months, tracking a global rally that sent the S&P 500 Index to a record.
China Shenhua Energy paced gains in a gauge of mainland companies traded in Hong Kong. Taiwan’s Taiex advanced to the highest level since November, stocks in Indonesia and the Philippines extended their advances to 13-month highs, and equities in Thailand neared bull-market territory. A gauge of currencies retreated for the first time in four days as Indonesia’s rupiah and South Korea’s won weakened.
The US’s S&P 500 Index exceeded the previous record set in May 2015 on Monday, extending gains from Friday when data showing a surge in US hirings brightened the economic outlook without fueling expectations that the Federal Reserve will raise interest rates sooner.
That gave fresh legs to a four-day rally in developing equities as global markets rebound on prospects policy makers will act to stem any fallout from the UK’s vote to leave the European Union.
“In the longer term, there is optimism that the US economy is going to lead global economic growth,” Ang Kok Heng, Kuala Lumpur-based chief investment officer at Phillip Capital Management, which oversees $630m, said by phone. “Post Brexit, some investors are more or less surprised how fast the markets have recovered.”
Stocks
The MSCI Emerging Markets Index rose 0.1% to 847.26 at 06:56. The gauge has advanced 6.7% this year and trades at 12.1 times its projected 12-month earnings, near its most expensive level since May 2015. The MSCI World Index is up 1.2% in 2016 and is valued at a multiple of 16.
Six out of 10 industry groups in the emerging-markets index climbed, led by telecommunications and materials shares. China Mobile added 1.3% in Hong Kong, the biggest contributor to gains in the developing-nations measure. China Coal Energy jumped 5.9% in Hong Kong after saying it will swing to a first-half profit from a net loss a year earlier.
The Hang Seng China Enterprises Index advanced 0.4%, its second day of increases, while the Shanghai Composite Index was little changed. Chinese economic data including reports on foreign direct investment, new loans and money supply are due as early as Tuesday, while trade figures expected Wednesday are forecast to show exports declined for a third straight month in US dollar terms.
Thailand’s SET Index edged up 0.1%, extending its increase from a January low this year to 20%. India’s S&P BSE Sensex, which entered a bull market on Monday, rose 0.3% on Tuesday.
Currencies, bonds
The MSCI Emerging Markets Currency Index retreated 0.1%, after rising 0.5% on Monday. The rupiah and won slipped at least 0.1%, while the Mexican peso strengthened 0.3%.
“Higher US bond yields and risk recovery suggest that delayed benefit from Friday’s solid US jobs report, some leadership certainty in the UK and a bold action plan in Japan have all combined to lend confidence,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore. “We see scope for dollar gains to continue in the near-term.”
In the sovereign bond markets, the yield on Korean bonds due to mature in June 2026 rose two basis points to 1.40%, while Indonesian bonds were little changed.
