Emerging-market stocks advanced, with the benchmark index gaining for a fourth day, after U.S. Federal Reserve Chairman Ben S. Bernanke said the central bank may buy more U.S. securities to boost growth.
The MSCI Emerging Markets Index advanced 0.3 percent to 1,124.54 as of 12:48 p.m. in London, adding to a three-day, 4.3 percent advance. Taiwan’s Taiex climbed to the highest since June 2008 after Nomura Holdings Inc. became the third brokerage this month to recommend buying the island’s equities. The BUX stock index fell 1.4 percent after Moody’s Investors Service lowered Hungary’s credit rating to one step above junk.
Bernanke said that Fed purchases of Treasury securities beyond the $600 billion announced last month are possible. U.S. unemployment may take five years to fall to a normal level, he said in an interview with CBS Corp.’s "60 Minutes" program, which aired in the U.S. yesterday night.
“The Fed is trying to sustain the momentum of the global economic recovery by stabilizing the financial system,” said Fitz Aclan, who helps manage $13 billion at Manila-based Banco de Oro Unibank Inc. “This is partly driving the general bullishness in emerging markets. Funds have been shifting into emerging markets because of better growth outlook.”
Moody’s downgraded Hungary to Baa3, its lowest investment grade ranking, and kept the negative outlook, the ratings company said in a statement today. The government’s plan to reduce the budget deficit relies on “temporary measures” and leading to a “gradual but significant loss” of financial strength, Moody’s said. The forint tumbled 2 percent against the dollar and depreciated 1.3 percent versus the euro, the most since Nov. 29.
OTP Bank Nyrt., Hungary’s largest lender, slid 1.7 percent. Richter Gedeon Nyrt., the country’s largest drugmaker, lost 2.2 percent.
The cost of insuring Hungarian sovereign debt rose about 16 basis points to 371 basis points, according to CMA prices for credit-default swaps.
The difference between the return investors require from emerging-market bonds and U.S. Treasuries widened 4 basis points to 2.45 percentage points, according to the JPMorgan Chase & Co. EMBI+ index.
The Polish zloty lost 2 percent against the dollar and 1 percent against the euro. The rand retreated 0.5 percent against the dollar. The Korean won and the Taiwanese dollar both gained at least 0.5 percent against the dollar on speculation developing Asia’s exports will grow.
Futures for Brazil’s Bovespa stock index fell 0.1 percent.
Taiwanese stocks rose 0.9 percent to the highest level since June 2008.
Nomura boosted its rating for Taiwan stocks to “bullish” from “bearish,” saying the index may offer “significant potential upside.” The brokerage joined Morgan Stanley and Goldman Sachs Group Inc. in recommending Taiwan shares next year as increased cooperation with China boosts tourism and spurs investment.
Tata Steel Ltd. jumped 3.3 percent after Riversdale Mining Ltd., 24.16 percent owned by the Indian company, said it had discussions with Rio Tinto Group on a possible A$3.5 billion ($3.46 billion) takeover proposal.
Russia’s Micex stock index gained 0.5 percent.
The price of oil gained 0.1 percent to $89.26 a barrel in New York, near a 26-month high.
Turkey’s ISE National 100 stock index jumped 0.7 percent.
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