(Bloomberg) -- Emerging-market stocks rose, sending the benchmark index to the highest level in 27 months, and currencies strengthened as reports showed China’s manufacturing grew and developing-nation fund inflows hit an 11-month high.
The MSCI Emerging Markets Index climbed 1 percent to 1,086.09 by 5 p.m. New York time, a fifth straight weekly advance. The Bloomberg-JPMorgan Asia Dollar Index rose 0.5 percent to a two-year high as India’s rupee gained 1.1 percent. The extra yield investors demand to hold emerging-market debt over U.S. Treasuries fell six basis points to 2.71 percentage points, the lowest level in five weeks, JPMorgan Chase & Co. data show.
China’s manufacturing expanded at the fastest pace in four months in September, adding to signs that growth is stabilizing in the world’s fastest-expanding major economy. Investors poured $4.3 billion into emerging-market equity funds in the week ended Sept. 29, the biggest amount since October 2009, and the funds are poised for record annual inflows, data compiled by EPFR Global showed.
“It’s a liquidity-driven market that’s driving investor confidence, and with the troubles that we see in Europe and the U.S., more money is basically flowing toward Asia,” said Pankaj Kumar, who oversees about $560 million as chief investment officer of Kurnia Insurans Malaysia Bhd. “We are in a super- sweet spot and we’re getting all the attention.”
The 21-nation MSCI index climbed for three consecutive days and completed its longest weekly stretch of gains since March. The gauge rallied 17 percent in the third quarter, its best quarterly performance in a year. Developing economies will expand 6.4 percent next year, compared with 2.4 percent growth in advanced nations, the International Monetary Fund forecast in July.
Fed Outlook
The MSCI Emerging index climbed to its highest level of the day after Federal Reserve Bank of New York President William Dudley said the central bank has options to add stimulus without major drawbacks, one of the clearest signs that policy makers will start a second round of unconventional monetary easing. His comments coincided with a U.S. government report showing consumer spending rose more than forecast in August as incomes climbed.
China’s purchasing managers’ index rose to 53.8 from 51.7 in August, the country’s logistics federation and statistics bureau said in an e-mail. The median forecast of 15 economists surveyed by Bloomberg News was 52.5. Readings above 50 indicate expansions. Chinese exchanges were closed today for a holiday.
Goldman Growth Estimate
India’s rupee rose to the strongest level versus the dollar in six months, while the Bombay Stock Exchange Sensitive Index climbed 1.9 percent to the highest level since January 2008. Goldman Sachs Group Inc. raised its growth forecast for India, saying the economy is likely to expand 8.5 percent this financial year, up from its previous estimate of 8.2 percent.
Russia’s Micex Index advanced 1.1 percent, the highest level since April, as oil and metal prices rallied on the Chinese manufacturing data. OAO Lukoil added 0.9 percent, while OAO GMK Norilsk Nickel, the nation’s biggest mining company, rose 1 percent.
The Bovespa stock index gained, completing the biggest weekly advance since July, as a drop in Brazilian manufacturing eased bets for higher borrowing costs and commodities gained. PDG Realty SA Empreendimentos & Participacoes, the Brazilian homebuilder, surged 4.2 percent.
Indonesia’s Jakarta Composite Index advanced to a record for a sixth straight day, while the Thai SET Index rose 0.3 percent to the highest level since November 1996. South Korea’s Kospi Index climbed 0.2 percent to the highest since May 2008.
The Hungarian forint rallied to the strongest level in four months on speculation local government elections on Oct. 3 will help solidify support for Prime Minister Viktor Orban’s government, which has pledged to reduce the budget deficit. The forint gained 0.9 percent versus the euro for the best gain among major emerging-market currencies.
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