Emerging-market stocks rose the most in a week after China said it will get more involved in resolving Europe’s debt crisis, boosting demand for riskier assets.
The MSCI Emerging Markets Index (MXEF) advanced 1.1 percent to 1,058.47 at the close in New York, the most since Feb. 8. Russia’s Micex Index (INDEXCF) rose to a six-month high as OAO OGK-3 surged on speculation it will merge its power assets in a share swap. India’s BSE Sensitive Index, or Sensex, also advanced to the highest level since August, led by Tata Motors (TTMT) Ltd., while Brazil’s Bovespa added 0.5 percent in Sao Paulo as homebuilders jumped.
People’s Bank of China Governor Zhou Xiaochuan said the nation will invest in Europe’s bailout funds and keep holdings of euro-denominated assets, bolstering the debt-stricken region that is China’s biggest trading partner. China is ready to get “more deeply involved” in helping Europe, Premier Wen Jiabao said on Feb. 14.
Zhou’s statement “definitely gave markets a boost,” Nick Chamie, head of emerging markets at RBC Capital Markets in Toronto, said by phone today. “It just helps to remind people that China will continue to buy European government bonds.”
The measure pared gains of as much as 1.5 percent as a decision slated for tonight on $130 billion euros ($171 billion) of aid for Greece was postponed until at least Feb. 20. Separately, minutes from the U.S. Federal Reserve showed a few policy makers said the central bank may have to consider purchasing more securities soon, while others said the economic outlook would have to worsen.
Beating Developed Nations
The MSCI emerging-markets gauge has advanced 16 percent this year, compared with a 7.8 percent gain for the MSCI World Index (MXWO) of developed nations. Developing-nation stocks trade for 10.6 times analysts’ earnings estimates, compared with a multiple of 12.7 for developed-market shares.
Chinese stocks listed on Hong Kong’s Hang Seng China Enterprises Index (HSCEI) climbed 2.4 percent, the most in two weeks. Europe accounts for 18 percent of China’s overseas shipments, according to Shenyin & Wanguo Securities Co.
The so-called BRIC countries of Brazil, India, Russia and China are all well disposed toward helping Europe resolve its debt crisis, Zhou said in Beijing today. China is ready to be more involved in resolving the issue through the European Financial Stability Facility and European Stability Mechanism, he said in a speech.
The Micex (MICEX) advanced 1.1 percent in Moscow to 1,579.38, the highest level since Aug. 5. OGK (OGKC) jumped 4.6 percent. Inter RAO is considering merging its Russian power assets, including OGK-3, into a single company this year, an Inter RAO spokesman, who declined to be identified in line with company policy, said by phone.
Brazilian homebuilders advanced as slowing inflation fueled speculation that further interest-rate cuts will help companies that depend on credit growth. Cyrela Brazil Realty SA Empreendimentos e Participacoes SA gained 5.1 percent to 18.09 reais, the highest level in a year.
Mumbai-based Tata Motors, owner of the Jaguar and Land Rover brands, jumped 7.4 percent to an all-time high after posting record third-quarter profit on rising sales at its luxury car unit in China.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose one basis point, or 0.01 percentage point, to 384 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
Vietnam’s Sacombank Securities JSC (SBS) and Ceylon Tobacco Co. Plc (CTC) of Sri Lanka will be added to the MSCI Frontier Markets Index at the close on Feb. 29, according to a statement posted on MSCI Inc.’s website. India’s IndusInd Bank Ltd. (IIB) will be removed from the MSCI Emerging Markets Index. No stocks were added to the index.
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