(Bloomberg) -- The iShares MSCI Emerging Markets Index rose, extending its biggest weekly gain in a month, as speculation China is loosening funding restrictions for property developers and banks bolstered confidence in the economy.
The exchange-traded fund added 1.3 percent to $39.23 at 10:24 a.m. in New York, bringing its advance for the week to 2.2 percent. The MSCI Emerging Markets Index rose 0.5 percent to 945.17. The Shanghai Composite Index climbed the most in four months after reaching record-low valuations, while the yuan posted the biggest weekly drop since at least 2007. The Micex Index led losses among major developing-nation gauges as the U.S. and the European Union expanded sanctions against Russia.
Equities rebounded after reaching the cheapest valuation level in a decade relative to developed stocks. China issued rules for a trial program allowing companies to sell preferred stock, expanding financing options for the nation’s banks. The Shanghai Securities News reported regulators are reviewing financing applications from “many” listed developers. The government is trying to bolster real estate and financial companies as the economy slows and bad debts increase.
“The real issue in the emerging world is: is it collapsing or just slowing?,” James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $360 billion in assets, said by phone. “I think we’re going to determine that China and the emerging markets as a whole have found a bottom.”
The premium investors demand to own emerging-market debt over U.S. Treasuries fell 0.01 percentage point to 314 basis points, according to JPMorgan Chase & Co.