Emerging stocks rise as new regulator spurs China; rupiah climbs

A woman holds Indonesian rupiah notes at a money changer in Jakarta, March 23, 2015. — Reuters pic
A woman holds Indonesian rupiah notes at a money changer in Jakarta, March 23, 2015. — Reuters pic

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HONG KONG, Feb 22 — Emerging-market stocks extended a weekly advance as oil rebounded and investors speculated that the new head of China’s securities regulator will take measures to bolster the world’s second-largest equity market. Indonesia’s rupiah strengthened.

The Shanghai Composite Index headed for a one-month high and China Construction Bank Corp paced gains for mainland shares traded in Hong Kong. China Petroleum & Chemical Corp led energy companies higher.

The MSCI Emerging Markets Index advanced toward the 50-day moving average after surging 4.2 per cent last week. 

The rupiah rose after a central bank official said the cut in lenders’ reserve requirements will add 165 trillion rupiah (RM51.685 billion) of potential capital for economic development.

Developing-nation equities resumed gains, rising for a fifth day in six, as oil’s rebound and a rally in China helped revive sentiment on riskier assets.

Liu Shiyu, previously chairman of Agricultural Bank of China Ltd, takes over as chairman of the China Securities Regulatory Commission from Xiao Gang, who was removed from his post on Saturday in the wake of last summer’s US$5 trillion (RM21.01 trillion) rout that reverberated across global financial markets.

Brent oil rose as Russia said talks on an output freeze will be done by March 1.

“China is a critical market for global investors, so the appointment is seen as move by the government to create a more transparent market,” Indra Mawira, investment manager at Panin Asset Management, said by phone from Jakarta. 

“I would stay cautious on this development,” he said, adding that he will continue to build up positions if there are corrections in the market.

The MSCI Emerging Markets Index added 0.3 per cent to 742.84 at 11:16am in Hong Kong. 

The benchmark gauge has declined 6.5 per cent this year and trades at 10.9 times the projected 12- month earnings of its member stocks. That compares with a multiple of 14.9 for developed-nation equities, which have fallen 7.4 per cent in 2016. — Bloomberg

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