Emerging stocks head for longest rally since 2005

Emerging-market stocks headed for their longest winning streak in 10 years as a surprise slump in Chinese exports prompted bets the government will boost stimulus while weighing on currencies including South Africa’s rand.

Industrial and Commercial Bank of China Limited led a 2.2 percent gain in the Shanghai Composite Index and the Hang Seng China Enterprises Index rallied to a seven-year peak. Russia’s currency rose 1.1 percent, the only one of 24 emerging-market peers to advance as oil gained for a third day in London. The lira fell to a record and the rand weakened the most since March 19.

The MSCI Emerging Markets Index added 0.7 percent to 1,041.75 by 1:57 p.m. in London as an 11-day gain drove its 14-day relative strength index to a two-year high. The yuan weakened the most in a month after China’s exports shrank 14.6 percent in March, fueling speculation policy makers will favor a weaker currency and pursue measures to shore up economic growth.

“The falling exports data has raised concerns among investors about China’s outlook, but it also fuelled bets that the government may provide additional stimulus to support growth,” Akbar Syarief, a fund manager at PT MNC Asset Management, said from Jakarta.

A gauge tracking 20 emerging-market currencies declined 0.4 percent to the lowest level in more than a week. Brazil’s real weakened 0.7 percent against the dollar, the rand decreased 1.3 percent and the lira lost as much as 1.1 percent to 2.6573 per dollar. Turkey’s currency has come under pressure due to mounting political uncertainty before general elections, according to Erkin Isik, a fixed-income strategist at Turk Ekonomi Bankasi AS in Istanbul.

While stock markets in the Philippines and Indonesia fell at least 0.7 percent, Hungary’s benchmark gauge added 3.8 percent and Russia’s dollar-denominated RTS Index climbed 0.9 percent.

The ruble, which advanced 5.6 percent last week, appreciated to 53.0170 per dollar. Russia’s currency is the world’s best performer this year after sliding 46 percent in 2014. This has caused a stampede in the bond market as US money managers raced back in. Yields on five-year government bonds fell for a fourth day, declining two basis points to 11.26 percent, the lowest since December 2.

Seven out of 10 industry groups in the MSCI Emerging Markets Index rose on Monday, led by health care and financial stocks. ICBC added 4.3 percent as the Shanghai Composite increased to the highest level since March 2008.