(Bloomberg) -- The iShares MSCI Emerging Markets Index rebounded from a four-week low after data showing a slowdown in China’s expansion bolstered speculation the government will take further steps to stimulate economic growth.
The exchange-traded fund rose 0.5% to $41.31 at 10:40 a.m. in New York. The MSCI Emerging Markets Index added 0.1% to 1,000.47. The Shanghai Composite Index climbed after the biggest slide since March 10 while China’s benchmark interest-rate swaps touched a one-month low on bets the central bank will loosen monetary policy. Russia’s ruble advanced for the first time in four days as the U.S. signaled it won’t impose additional sanctions before talks on Ukraine tomorrow.
China’s expansion moderated to the weakest pace in six quarters and property construction plunged, testing the government’s commitment to keep reining in credit as risks mount of a deeper economic slowdown. The country will lower reserve ratios at “qualified” rural banks in order to provide more funds to agriculture-related industries, according to a statement on the government website today, citing a State Council meeting chaired by Premier Li Keqiang.
“When we look at China, we don’t see it falling apart,” Sean Lynch, Omaha, Nebraska-based global investment strategist at Wells Fargo Private Bank, which oversees about $170 billion, says by phone. “The market is encouraged by the fact that they’ll stand by if we see growth starts to fall off dramatically. There still are some levers that China can pull to help stimulate the economy, and that would be well received by the markets.”
The Shanghai Composite Index extended its quarterly rally to 3.5%. The cost of the one-year rate swap, the fixed payment needed to receive the floating seven-day repurchase rate, slipped two basis points, or 0.02 percentage point, to 4.06% as of 4:48 p.m. in Shanghai. It reached 4.02% earlier, the lowest level since March 13.
The yuan in Hong Kong traded within 0.1% of a 14- month low after the central bank weakened the currency’s reference rate for a third day.
Brazil’s Ibovespa rose after a two-day slump as Vale SA drove a rally in raw-material producers. Localiza Rent a Car SA gained after reporting first-quarter earnings that exceeded analysts’ estimates. Steelmaker Cia. Siderurgica Nacional SA jumped after announcing a plan to buy back as many as 67.9 million shares through May 23.
Russia’s Micex Index jumped 1.1% while the ruble trimmed this year’s slide. Envoys from Ukraine, Russia, the U.S. and European Union are scheduled to hold talks tomorrow in Geneva. Ukraine’s parliament today rejected a Russian call to send representatives of its eastern regions to the negotiations.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell 0.03 percentage point to 297 basis points, according to JPMorgan Chase & Co.