Azernews.Az

By Bloomberg

Emerging-market stocks headed for a second weekly advance as speculation China will adopt measures to bolster the economy supported the nation’s equities. The ruble slid, trimming its biggest weekly appreciation in 16 years.

China Life Insurance Co. and Haitong Securities Co. climbed 10 percent in Shanghai, where the benchmark index posted its biggest two-day gain in five years. Russia’s Micex Index rose for a third day led by OAO Lukoil as Brent crude increased, while Kazakh shares extended the largest weekly advance since 2008. The ruble fell 2.8 percent against the dollar, paring the five-day rally driven by a Russian directive for exporters to reduce their foreign-currency holdings to shore up confidence.

The MSCI Emerging Markets Index added 0.3 percent to 953.58 by 12:32 p.m. in London, taking the five-day gain to 1 percent. The People’s Bank of China will temporarily waive a requirement for lenders to set aside reserves for some deposits, people with knowledge of the matter said, highlighting efforts to boost lending amid a slowdown in the world’s second-largest economy.

Advances in emerging markets are “based mainly on perceptions of more stimulative policies out of China,” Nicholas Spiro, the managing director of Spiro Sovereign Strategy in London, said by e-mail. “Trading is thin and one shouldn’t read too much into this rally, not least given the risk of a further slide in oil prices and the plethora of risks in EMs, in particular Russia.”

As Russia contends with sanctions over the conflict in Ukraine and a looming recession, Standard & Poor’s said Dec. 23 there’s at least a 50 percent chance it will cut the sovereign’s credit rating to below investment grade within 90 days.

Fragile Rally

An index tracking emerging-market currencies fell 0.3 percent, trimming this week’s increase to 0.3 percent, the most since October. The ruble dropped to 54.0600, paring its five-day appreciation to 8.2 percent, the most since 1998.

Today’s decline underscores the fragility of coordinated measures by Russia’s government and central bank that drove the ruble’s 49 percent rebound from a record-low 80.10 on Dec. 16. Gazprom and four other state-controlled exporters were ordered this week to cut foreign-currency holdings by March 1 to levels no higher than they were on Oct. 1, while the central bank sought to make it easier for banks to access dollars and euros.

“Exporters are through with their selling, now we’re back to fundamentals,” Sergey Fishgoyt, the deputy head of foreign- exchange trading at Otkritie Bank in Moscow, said by e-mail. With oil trading around 60, “the fundamental range for the ruble is now 58 to 68.”

Kazakh Shares

Average trading volume in the ruble for the first four days of the week was almost 30 percent below the 12-month average, according to data compiled by Bloomberg.

Lukoil increased 2.6 percent. Brent crude climbed 0.3 percent to $60.44 a dollar in London amid concern about Libyan supply after government forces struck Islamist militias close to the nation’s largest terminal at Es Sider. That reduced this year’s loss to 45 percent.

The ruble’s weekly rebound helped put the Kazakhstan Stock Exchange Index on course for a 24 percent weekly advance, the most since November 2008. The gauge slumped 11 percent last week on speculation the Russian currency’s 39 percent tumble this year would force the former Soviet state to devalue its currency as it did in February.

All 10 industry groups in the MSCI Emerging Markets Index rose, technology and financial companies. The Shanghai Composite Index increased 2.8 percent, while benchmark gauges in Taiwan and Malaysia climbed at least 0.6 percent.

Doosan Heavy Industries & Construction Co. increased for the third day in Seoul after receiving an order worth 1.8 trillion won ($1.6 billion) for a coal-fired power plant in Vietnam. The emerging-markets gauge has lost 4.9 percent this year and trades at 11.1 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has increased 4 percent and is valued at a multiple of 15.7.