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Emerging stocks rise to high on China as India leads world

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(Bloomberg) — Emerging-market stocks rose to a one- month high led by technology shares on bets China will take steps to bolster equities. India’s benchmark gained the most in the world on optimism the main opposition party will win elections.

Samsung Electronics Co. jumped the most since August in Seoul as its chairman was reported to be stable after surgery. India’s benchmark index rallied to a record as elections drew to a close. Turkish equities gained 0.8 percent on improved earnings. Russia’s stocks fluctuated amid concern the nation will face wider sanctions if it supports secession votes by separatists in eastern Ukraine.

The MSCI Emerging Markets Index climbed 0.6 percent to 1,012.94 at 1:50 p.m. in London, set for the strongest level since April 11. The Sensex has risen 19 percent since Sept. 13, when the Bharatiya Janata Party named Narendra Modi as its prime minister candidate. China will relax foreign-investment limits in listed companies, increase quotas for capital flow, and develop commodities trading tools, the cabinet said May 9.

“Gains in Chinese stocks are being driven by new comments about the further opening up of capital markets,” said Hertta Alava, head of emerging markets at FIM Asset Management Ltd. in Finland, which oversees the equivalent of about $415 million in developing-nation assets. “There are strong hopes that if Modi becomes the next prime minister, he will initiate new reforms to accelerate growth.”

Stock Valuations

The developing-nation measure has increased 1 percent this year and trades at 10.5 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 1.5 percent in the period, and is valued at a multiple of 14.8.

All 10 industry groups in the emerging-markets gauge gained today, with technology stocks rallying 1.2 percent and Samsung jumping 4 percent. Chairman Lee Kun Hee was operated on early yesterday after being resuscitated the previous night, Rhee So Eui, a spokeswoman for Samsung Group, said in a statement. Tencent Holdings Ltd., Asia’s largest Internet company, soared 5.3 percent in Hong Kong, trimming its slump since reaching a record on March 6 to 21 percent. Turkey’s gauge rose to the highest since Dec. 2, led by Akbank TAS. Of the 51 stocks that have announced first-quarter results, 44 reported stronger revenue for the period, data compiled by Bloomberg show. Shares in Dubai, which will be added to the MSCI emerging-market index at the end of the month, surged 1.5 percent, taking a 2014 rally to 55 percent, the steepest gain among 93 global equity indexes tracked by Bloomberg.

Government Change

The S&P BSE Sensex jumped 2.4 percent to the strongest level since April 1979, led by Coal India Ltd., the world’s biggest producer of the fuel. Votes will be counted on May 16.

“Markets seem to have made up its mind that a Modi-led government will come to power,” Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance Co., said by phone from Mumbai. “Traders are positioning for the results day. There’s an expectation that a change in government will lead to improvement in India’s macroeconomic fundamentals.”

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 1.5 percent and the Shanghai Composite Index rallied 2.1 percent, the most since March 21.

Policy makers are seeking to support the stock, bond and commodities markets as growth decelerates. President Xi Jinping said the economy needs to adapt to a “new normal” on growth, according to a state news report.

Illegitimate Votes

Equity markets in Abu Dhabi, Qatar, Poland and South Africa added at least 0.4 percent. The Micex index swung between gains and losses, falling as much as 0.6 percent and last trading 0.6 percent higher. Investors are awaiting President Vladimir Putin’s response to the Donetsk and Luhansk votes that were dismissed as illegitimate by the Ukrainian government and its U.S. and European allies.

Vietnam’s VN Index tumbled 4.7 percent, the steepest decline among benchmark gauges in Asia, amid escalating tensions with China over disputed waters.

The premium investors demand to own emerging-market debt over U.S. Treasuries slipped 0.02 percentage point to 277 basis points, according to JPMorgan Chase & Co. indexes.

–With assistance from Kana Nishizawa in Hong Kong, Nguyen Kieu Giang in Hanoi and Taylan Bilgic in Istanbul.

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