Emerging stocks, currencies gain 3rd day on China inflation

BLOOMBERG

Emerging-market currencies and stocks rose for a third day as Chinese inflation data spearheaded an advance in the nation’s equities and a gauge of the dollar extended losses. Ukrainian bonds gained the most in a month after the country’s premier resigned.
China’s stocks rose the most this month amid signs of a pickup in industrial demand. Sberbank PJSC led gains in Moscow as Russia’s RTS index headed for the highest close in 17 months. Brazil’s real gained as lawmakers prepared to vote on impeachment of the president and South Africa’s rand advanced for a second day as the greenback fell against peers. The yield on Ukraine’s note due 2019 fell the most since March 4. Energy shares rose for a fourth day as Brent crude reversed losses to reach a four-month high.
Developing-nation currencies have benefited from a dovish Federal Reserve weakening the dollar and relieving pressure on China’s yuan. The first monthly increase in China’s factory gate prices since 2013 added to signs of an improving economy and raised prospects the People’s Bank of China will leave rates unchanged for a longer period as a threat of deflation wanes. Oil has gained more than 50 percent since falling to a 12-year low in January amid signs a global glut will ease as American output declines.
“Emerging markets are gaining today due to the benign CPI data out from China overnight and also the better-than-expected PPI data,” said Michael Wang, a strategist at hedge fund Amiya Capital LLP in London, who favours shares in India, Mexico and Poland. “It’s another sign that growth in China may be stabilizing. This is helping emerging-market energy and material sectors.”
Investors have pumped more than $10 billion into funds that invest across developing nations in the last eight weeks, the longest streak since May. Last week, stock exchange-traded funds increased by $161.9 million and bond funds by $240.8 million, according to data compiled by Bloomberg.
Brent crude reversed earlier losses to trade up 1 percent at $42.4 a barrel in London, the highest level since Dec. 4.

Currencies
The MSCI Emerging Markets Currency Index rose 0.6 percent as of 2:15 p.m. in London. The measure is up 3.9 percent this year as the Bloomberg Dollar Spot Index, which tracks the currency against 10 peers, fell 4.6 percent.
The won strengthened 0.6 percent, South Africa’s rand advanced 1.8 percent following a 1.9 percent gain on
Friday.
Turkey’s lira gained 0.9 percent, the biggest advance after the rand among 24 emerging-market currencies, after a person familiar with the matter said political leaders are planning to choose Central Bank Deputy Governor Murat Cetinkaya as the next governor.
Russia’s ruble gained 0.7 percent while Mexico’s peso rose 0.3 percent. China’s central bank strengthened the yuan fixing by 0.13 percent. Brazil’s real rose 1.2 percent on growing speculation the ouster of President Dilma Rousseff is drawing closer as Congress prepared for key votes on the process this week.

Bonds
Ukrainian bonds fell the most in a month after Prime Minister Arseniy Yatsenyuk resigned, prompting bets a months-long government crisis may soon be resolved with the appointment of Parliamentary speaker Volodymyr Hroisman as premier.
Thailand’s 10-year sovereign bonds fell the most in almost six months on speculation investors are selling the notes before an auction next week. The yield rose nine basis points to 1.74 percent after increasing 14 basis points over the previous two days. Russian and Hungarian bond prices declined.
The premium investors demand to own emerging-market debt over U.S. Treasuries narrowed three basis points to 412, according to JPMorgan Chase & Co. indexes.
Argentina may sell as much as $12 billion in bonds with three separate maturities if it returns to international debt markets for the first time since a 2001 default, according to its bond prospectus obtained by Bloomberg.

Stocks
The MSCI Emerging Markets Index gained 1 percent. All 10 industry gauges rose, with the energy measure up 1.6 percent, extending a 2.1 percent advance on Friday. Cnooc Ltd. advanced 1.7 percent in Hong Kong and AngloGold Ashanti rose in Johannesburg to the highest since 2013 as the price of the commodity neared a three-week high.
The developing-nation stock benchmark has climbed 3.9 percent this year and trades at 12.1 times estimated 12-month earnings, compared with 16.3 times for the MSCI World Index, which has retreated 1.8 percent this year.
Nigeria’s All Share Index fell 2.5 percent as Union Bank of Nigeria declined the most since 2013 after reporting full-year profit tumbled almost 50 percent.
The Shanghai Composite Index increased 1.6 percent and the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 1.2 percent. Markets in Vietnam and India rose as much as 1.2 percent.
Russia’s Micex Index added 1.2 percent, set for the highest close since March 22, while the dollar-denominated RTS Index rose 1.9 percent. Credit Suisse Group AG on Monday recommended selling Mexican equities and increasing exposure to Russian companies.
Some non-index Russian assets remain undervalued, according to Anna Vaananen, a fund manager at Credit Suisse Asset Management.
“The economy and the ruble are stabilizing, interest rates will come down 150 to 200 basis points this year and inflation will come down, which in turn will lead to a pick- up in non-index stocks as soon as there are inflows into active funds,’ Vaananen said in an interview.