Emerging stocks advance as technology companies rally to record

By Korea Herald
  • Published : May 28, 2014 - 20:55
  • Updated : May 28, 2014 - 20:55
Emerging-market stocks climbed for the first time in three days as Samsung Electronics Co. led a gauge of technology companies to a record after U.S. data added to signs the world’s biggest economy is rebounding.

Samsung, which gets a third of its sales from the U.S., rose 1.9 percent in Seoul. Lenovo Group Ltd. posted its longest rally since 2003 in Hong Kong as Chinese technology companies surged on bets they will benefit from the government’s dispute with the U.S. over cyberspying. South Africa’s rand, Turkey’s lira and Indonesia’s rupiah fell 0.4 percent versus the dollar while Russia’s ruble weakened for a third day.

The MSCI Emerging Markets Index added 0.4 percent to 1,037 at 9:12 a.m. in London. The gauge has advanced 4.2 percent this month, poised for the steepest increase since October. U.S. data yesterday showed an unexpected increase in durable goods orders in April, while confidence among American consumers rose in May to the second-highest level since 2008.

“An improving U.S. economy supports global prospects for growth,” Allan Yu, first vice president at Metropolitan Bank & Trust Co., which manages $7.29 billion, said in Manila. “The U.S. is a key trading partner for many markets and its state of health has a big impact on other economies.”

The developing-markets gauge has risen 3.4 percent this year and trades at 10.7 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has gained 2.8 percent and is valued at a multiple of 14.9.

Tech rally

Seven of 10 industry groups in the developing-nation measure advanced, with a gauge of technology shares climbing 1.3 percent to an all-time high. Samsung gained the most in two weeks as South Korea’s KOSPI index added 1 percent. Advantech Co. rallied 6.9 percent to a record in Taipei, sending the TAIEX Index to the highest level since January 2011.

Lenovo, the world’s biggest maker of personal computers, rose 1 percent, its seventh day of gains. Yonyou Software Co. and Aisino Co. jumped more than 6 percent in Shanghai. The Chinese government is reviewing whether domestic banks’ reliance on high-end servers from International Business Machines Corp. compromises the nation’s financial security, according to people familiar with the matter.

The Shanghai Composite Index climbed 0.8 percent to a two-week high. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong rose 1.1 percent to the highest level since April 14. Data today showed China’s industrial profits in the January-April period rose 10 percent, versus 10.1 percent through March.

Lowest valuations

Manulife Asset Management is buying Chinese shares traded in Hong Kong this month, the first time this year, betting that government steps to buoy growth will finally boost the lowest equity valuations in Asia, according to Ronald Chan, head of Asian equities at Manulife, which oversees $269 billion.

Thailand’s SET Index jumped 1.1 percent as construction-related stocks such as Siam Cement Pcl and Italian-Thai Development Pcl rallied on bets the military junta will accelerate spending on infrastructure to boost the economy.

The rand weakened to a three-week low. It sank 0.9 percent yesterday after data showed the nation’s economy contracted for the first time since 2009. The worst quarter for South Africa’s economy since the 2009 recession is leaving central bank governor Gill Marcus with few options to battle inflation that breached her target last month and is forecast to get worse.

Russia’s Micex Index dropped 0.1 percent, extending yesterday’s 2.2 percent loss. Ukraine’s government said it will press on with military operations against pro-Russian rebel fighters after its forces retook Donetsk airport and inflicted significant losses on the separatists.

The ruble lost 0.3 percent versus the dollar, its third day of declines and poised for the longest slump since April 15. The lira slid for a fourth day, poised for the longest losing streak in a month.

Dubai’s DFM General Index retreated 1.6 percent, halting a four-day rally, as Emaar Properties PJSC and Dubai Islamic Bank PJSC sank more than 2 percent.