Emerging-Market Stocks Rise to 10-Month High on Economy Rebound

By Michael Patterson
July 23 (Bloomberg) -- Emerging-market stocks rose to the highest level in 10 months on speculation Asia will recover from the global recession faster than economists predicted.
China’s Shanghai Composite Index climbed to a 13-month high and benchmark equity indexes in South Korea and Indonesia advanced after the Asian Development Bank said the region’s economic rebound may be “V-shaped.” The Bombay Stock Exchange Sensitive Index added 2.8 percent as Nomura Holdings Inc. and Citigroup Inc. said Indian companies are reporting better-than- expected earnings. Magnitogorsk Iron & Steel led gains by Russian steelmakers after JPMorgan Chase & Co. made it a “top pick.”
The MSCI Emerging Markets Index increased 1 percent to 814.51 as of 11:04 a.m. in London, which would be the highest close since Sept. 26. Asian governments led by China have cut borrowing costs and pledged more than $950 billion to revive their economies amid tumbling exports, prompting economists to raise estimates for the region’s growth this year.
“So far the stimulus has worked,” Simon Godfrey, a senior investment specialist at Fortis Investment Management, said in a Bloomberg Television Interview in Hong Kong. “We’ve seen some very strong rebounds in consumer markets.”
All but four of the 22 emerging-market currencies tracked by Bloomberg strengthened against the dollar today, led by a 0.5 percent gain in Indonesia’s rupiah. The Philippine peso rose as much as 0.3 percent after Moody’s Investors Service upgraded the country’s debt rating to the highest in more than four years.
ADB Forecast
The extra yield investors demand to own emerging-market bonds over U.S. Treasuries climbed 2 basis points to 4.07 percentage points, according to JPMorgan’s EMBI+ Index.
China Minsheng Banking Corp., the nation’s first privately owned bank, climbed 4.6 percent and Industrial Bank of Korea, the country’s biggest lender to small businesses, added 8 percent.
East Asian economies including China, South Korea and Indonesia will probably grow faster than the 3 percent estimated in March, before accelerating to 6 percent in 2010, the Manila- based ADB said in a report today. Separately, the International Monetary Fund said China has scope to expand its 4 trillion yuan ($586 billion) stimulus package.
Maruti Suzuki India Ltd., maker of half the cars sold in the country, surged to a record following an unexpected 25 percent increase in first-quarter profit. Cigarette maker ITC Ltd. gained 4.4 percent after it also beat forecasts.
Eight of the 10 non-financial companies in India covered by Nomura have reported earnings that “surprised positively,” analysts led by Prabhat Awasthi wrote in a report yesterday. Of the 138 companies covered by Citigroup, the 19 that have already reported profits so far have beaten estimates by 16 percent, analysts led by Aditya Narain said.
Gazprom Bonds
Russia’s Micex index rose to the highest level in three weeks as Magnitogorsk advanced for an eighth day, the longest winning streak in two years. Dollar- and euro-denominated bonds sold by OAO Gazprom, the Moscow-based gas export monopoly, climbed on their first trading day, according to ING Groep NV prices on Bloomberg. The shares advanced 2 percent.