Emerging Stocks Rise for Third Day, Currencies Gain on Ireland
Emerging-market stocks rose for a third day while currencies strengthened amid speculation an agreement to rescue Ireland’s banks will help shore up global economic growth.
The MSCI Emerging Markets Index advanced 0.8 percent to 1,120.32 as of 4:10 p.m. in Taipei, set for the highest level since Nov. 12. The Bombay Stock Exchange’s Sensitive Index and Turkey’s benchmark ISE National 100 Index both jumped more than 1 percent while the Shanghai Composite Index dropped 0.2 percent, paced by banks, after China boosted the amount of money that lenders must set aside to curb inflation.
Samsung Electronics Co., the South Korean electronics maker that gets about 22 percent of sales from Europe, jumped to the highest since April, while the won appreciated 0.7 percent, pacing gains among developing-nation currencies. China Construction Bank Corp. led lenders lower in Shanghai after the central bank ordered a 50 basis point increase in reserve ratios.
“The risk-on sentiment prevails as better news out of Ireland reduces the risk of a default event in Ireland,” said Tim Condon, head of Asian research at ING Groep NV in Singapore.
Irish Prime Minister Brian Cowen said yesterday in Dublin that he expects talks on the details of financial assistance for Ireland to be completed in the “next few weeks.” Finance Minister Brian Lenihan said the loan will be less than 100 billion euros ($137 billion). He declined to give further details at a press conference.
Stabilizing the Situation
“In the short term, it will stabilize the situation, there’s no doubt about that,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London, who estimates a package of between 80 billion euros and 100 billion euros. “But as we’ve seen in the case of Greece, uncertainty will remain.”
Samsung Electronics climbed 3.7 percent. LG Electronics Inc., the world’s third-largest handset maker that gets about 16 percent of sales from Europe, jumped 3.5 percent. The won appreciated to 1,125.85 per dollar in Seoul, according to data compiled by Bloomberg.
Among other currencies, Taiwan’s dollar gained 1.4 percent to NT$30.25 and Malaysia’s ringgit advanced 0.6 percent.
China’s Shanghai Composite Index dropped, extending its biggest two-week decline since May, on speculation that monetary tightening will crimp economic growth. China Construction, the country’s second-largest bank, dropped 2.3 percent in Shanghai while Agricultural Bank of China Ltd. fell 1.1 percent.
The reserve ratio increase announced by the People’s Bank of China on Nov. 19 to cool the fastest rise in consumer prices in two years was the second in two weeks. The move came after Premier Wen Jiabao held a Cabinet meeting earlier last week and called for a crackdown on speculation in agricultural goods, saying price controls may be needed on “daily necessities.”
To contact the reporter on this story: Weiyi Lim in Taipei at Wlim26@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
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