Shanghai - Most emerging-market stocks rose as investors weighed China’s move to support its share market after Monday’s rout and technical indicators signaled recent losses were overdone. Indonesia’s rupiah led Asian developing-nation currencies higher.
Health-care companies and materials shares gained the most among industry groups, with the MSCI Emerging Markets Index’s 14-day relative-strength index close to the level of 30 that some traders see as a signal a market is set to rebound. The CSI 300 Index recovered after a 7 percent plunge Monday triggered a trading halt in Chinese shares under a new circuit-breaker mechanism. Hong Kong’s Hang Seng China Enterprises Index slid to a four-month low. The yuan rose from a five-year low. The rupiah halted a five-day drop after Indonesia cut fuel prices.
The worst-ever start to a year for Chinese shares sparked a selloff in Asia, Europe and the US and came after weak factory data spurred concern that the slowdown in the world’s second- biggest economy will curb global growth. Chinese state-controlled funds bought equities and the securities regulator signaled a selling ban on major investors will remain beyond this week’s expiration date, according to people familiar with the matter.
“Investors will prefer to stay on the sidelines to process these events in China,” Jonathan Ravelas, chief market strategist at BDO Unibank, said in Manila. “China’s reassurance is soothing some nerves but the volatility will continue.” Still, it’s a good time to look for some “value” stocks, he said.
The MSCI Emerging Markets Index was little changed at 8:19 a.m. in London as 390 stocks gained and 264 fell. It slumped 3.3 percent on Monday. The gauge is trading at 10.6 times its 12- month projected earnings, near the cheapest level since September. The MSCI World Index is valued at a multiple of 15.4.
Stocks
The CSI 300 climbed 0.3 percent after dropping as much as 2.7 percent at the open. The Shanghai Composite Index sank 0.3 percent, while the Hang Seng China Enterprises Index fell 0.95 percent, extending its steepest decline since August on Monday. Chinese policy makers, who went to unprecedented lengths to prop up stock prices during a summer rout, are trying to prevent financial-market volatility from weighing on an already-slowing economy.
Government funds purchased local stocks on Tuesday after the 7 percent tumble in the CSI 300 on Monday, said the people, who asked not to be identified because the buying wasn’t publicly disclosed. The China Securities Regulatory Commission asked bourses verbally to tell listed companies that the six- month sales ban on major stockholders will remain valid beyond January 8, the people said.
The Chinese regulator also suggested it’s open to tweaking the circuit breakers. China’s central bank conducted the biggest reverse-repurchase operations since September, adding funds to the financial system after money-market rates climbed to an eight-month high.
Seven out of 10 industry groups in MSCI’s developing- markets gauge advanced, led by health-care companies and materials shares. Gold Fields Ltd. jumped 8.1 percent in Johannesburg as bullion gained. The Jakarta Composite Index rose 1 percent, after sliding the most since Dec. 18 the day before, while Malaysian equities rebounded from the biggest drop since Aug. 24. Stocks gauges in Turkey and Abu Dhabi rose 0.7 percent.
Currencies
A measure tracking 20 emerging-market currencies was little changed, near a record low. The yuan rose 0.2 percent versus the dollar in Shanghai after it fell 0.7 percent in the last three sessions, the most since August, to reach a five-year low on Monday.
The rupiah strengthened 0.7 percent as the government’s latest fuel-price cuts spurred optimism that consumer spending will increase and help the economy. The currency is the best- performing in Asia in the past three months with a gain of 5 percent as overseas investors boosted holdings of Indonesian debt to a record.
Currencies in India, the Philippines and Malaysia added at least 0.2 percent. South Africa’s rand weakened for a third day and Russia’s ruble slid 0.3 percent.
Bonds
The yield on China’s 10-year sovereign bonds due October 2025 rose two basis point to 2.91 percent, the highest since December 18.
In Malaysia, the yield on government notes due September 2025 was little changed at 4.18 percent, while that on Korean bonds was 2.06 percent, up three basis points.
BLOOMBERG