Anuchit Nguyen Bangkok
EMERGING market stocks headed for the biggest first-quarter rally in three years on signs that China will do more to support growth in the world’s second-largest economy. The rand weakened.
Industrial and Commercial Bank of China led a gauge of Hong Kong-traded mainland shares to a 2011 high. Taiwan Semiconductor Manufacturing climbed 2.1 percent, providing the largest boost to the developing-nation measure.
Indonesian equities gained 1.2 percent. The rand lost 0.5 percent versus the dollar before the release of trade data. South Korea’s won slid 0.4 percent as the central bank signalled prospects of more monetary easing.
Raising bets
The MSCI Emerging Markets index, which added 0.4 percent to 973.12 by 1.59 pm.in London, has risen 1.7 percent in 2015 as central banks in Asia and Europe boosted stimulus.The gauge is poised for the best first quarter since 2012.
China reduced down payments for second homes and broadened a sales-tax exemption on Monday, a day after central bank governor Zhou Xiaochuan said more could be done to support growth.
“Investors have raised bets that the Chinese government will have to take more action,” Komsorn Prakobphol, an investment strategist at Tisco Financial Group, said. “It cuts the risk of a further slowdown, which will benefit developing markets.”
All 10 industry groups in the developing-nation gauge rose, led by energy and health-care companies. The Hang Seng China Enterprises index of Chinese stocks listed in Hong Kong added 0.3 percent, extending Monday’s 3.4 percent jump. Industrial and Commercial Bank of China added 1.2 percent.
The Shanghai Composite index fell 1 percent, retreating from a seven-year high, amid concern recent gains have gone too far, too fast.
Rand weakens
The MSCI Emerging Markets index trades at 11.9 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World index has advanced 2.6 percent this year and is valued at a multiple of 16.7.
“I would expect that the second quarter will be another hard quarter for emerging markets,” said Maarten-Jan Bakkum, an emerging-markets strategist at ING Investment Management.
“Deteriorating growth momentum, negative capital flows, increasing worries about Chinese growth, high pressure on the fundamentally weak countries such as Brazil and Turkey” would weigh on sentiment, he said.
Dubai’s DFM General index climbed 1.2 percent, paced by gains in Emaar Properties. Indonesia’s Jakarta Composite index headed for the sharpest advance since March 6 as Bank Central Asia and Bank Mandiri rose to records.
The Philippine Stock Exchange index increased 0.5 percent to an all-time high. The won fell for a second day and the yield on the government’s three-year bonds slid to a record low.
The rand weakened for a fifth day. Russia’s rouble lost 0.1 percent as oil headed for a third-quarterly loss. The Micex index was little changed.– Bloomberg