Emerging-Market Stocks Advance on Metal Prices, Growing Demand in China

Aug. 16 (Bloomberg) -- Mark Matthews, a strategist at Macquarie Capital Securities in Hong Kong, talks about his investment strategy for Asian stocks. Most Asian stocks fell, led by electronics and finance companies, after Japan’s economy expanded at the slowest pace in three quarters and Hong Kong announced measures to cool home prices. Matthews talks with Bloomberg's Mark Barton on "Global Connection." (Source: Bloomberg)

Emerging-market stocks rose as rallying metal prices and signs of growing demand in China offset lower-than-estimated growth data from New York and Japan.

The MSCI Emerging Markets Index of 21 developing countries rose 0.5 percent to 985.22 at 11:44 a.m. New York time, after falling 3 percent last week, its biggest weekly decline in more than a month. Brazil’s Bovespa stock index climbed for a third day, after Chile’s Lan Airlines SA said it would buy Brazil’s Tam. Shares in Poland and Hungary rose at least 0.9 percent. The Shanghai Composite Index jumped 2.1 percent, the biggest gain since July 28, after freight rates and Chinese power consumption rose.

Copper for three-month delivery rose 1.2 percent in New York. Earlier, emerging shares had fallen after Japan’s GDP gained an annualized 0.4 percent in the three months ended June 30, slower than the median estimate of 2.3 percent-growth in a Bloomberg survey. The Federal Reserve Bank of New York’s general economic index rose to 7.1 this month from 5.1 in July, falling short of the median estimate of 8 in a Bloomberg survey.

“I have difficulty seeing a sustained rally at this point,” said Paul Biszko, strategist at Royal Bank of Canada in Toronto, “More and more of the economic figures data are confirming a slowdown and it’s much too early for investors to make the call at what stage of the slowdown we’re at and what the depth of it will be.”

Airline Deal

Tam SA climbed to the highest since Jan. 19, rising 4.7 percent, after Lan Airlines agreed to buy it for $3.7 billion to create the world’s 11th largest carrier by passengers.

OAO GMK Norilsk Nickel, the biggest producer of the metal, gained 1.5 percent, its biggest rise in a week. Nickel prices gained 0.9 percent in New York.

Poland’s KGHM Polska Miedz SA, Europe’s largest miner of copper, rose 1.1 percent.

The Chilean peso rose to a six-month high as traders forecast interest-rate increases and copper rose.

The spread between the yield investors demand from emerging market bonds and 10-year U.S. Treasury bonds widened eight basis points to 285, according to the JPMorgan Chase & Co. EMBI+ index, the highest this month.

China Cosco Holdings Co., the country’s largest operator of dry-bulk ships, jumped by the 10 percent daily limit in Shanghai as Chinese steel mills revived iron ore imports. China Shenhua Energy Co., a unit of the nation’s largest coal producer, rose 5.4 percent as the company stepped up output.