Emerging Stocks Climb on China Speculation, Durable Goods
Emerging-market stocks rose the most in a week on speculation China will take further steps to bolster economic growth and as U.S. durable goods order and pending home sales beat economists’ estimates.
The MSCI Emerging Markets Index (MXEF) added 0.7 percent to 913.31 at the close of trading in New York, its steepest gain since June 19. The Hang Seng China Enterprises Index posted the longest winning streak in three weeks. OAO MRSK Holding, a Russian electricity distribution company, soared in Moscow to lead the advance in the Micex Index. (INDEXCF) OGX Petroleo e Gas Participacoes SA slumped in Sao Paulo after the oil company controlled by billionaire Eike Batista cut production targets.
China may introduce “more proactive” policies to ensure stable economic growth, the China Securities Journal said today. Orders for durable goods rose 1.1 percent in the U.S., a Commerce Department report showed. The median forecast of 76 economists surveyed by Bloomberg News called for an 0.5 percent gain. Separate data showed more Americans than forecast signed contracts to buy previously owned homes last month. European leaders meet tomorrow to find a solution to the debt crisis.
“Any bit of positive noise processes into stronger reactions in the market right now,” Simon Quijano-Evans, the head of emerging-market research for Europe, the Middle East and Africa at ING Groep NV, said by phone from London today. “There’s expectation that China will act on some more impulses, that maybe we’ll see a better backdrop in the euro zone and the U.S. not coming in as negative as expected -- it’s a mixture of things giving some positive sentiment.”
The MSCI Emerging Markets Index has slumped 12 percent this quarter on concern Europe’s debt crisis is escalating. The gauge trades at 10 times estimated earnings, compared with a 12 multiple for the MSCI World Index of developed nations, according to data compiled by Bloomberg.
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF tracking developing-nation shares, rose 0.6 percent to $37.65.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, dropped 2.7 percent to 28.42.
The Micex Index added 1.7 percent in Moscow. OAO Mechel, the country’s largest coking-coal producer, gained 1.6 percent, rising for a second day. OAO MRSK surged 10 percent, the most since August 2009.
Brazil’s Bovespa declined 1.4 percent in Sao Paulo. OGX Petroleo plunged 25 percent, the most on record. The shares fell after the Brazilian company cut production targets by as much as 75 percent at its first oil project.
New World Resources Plc (NWR), the biggest Czech producer of coking coal, gained 0.5 percent, snapping four days of losses, as the price of coal rose.
The Hang Seng China Enterprises Index advanced the most since June 18. China’s government will announce plans to set up exchange traded funds in Hong Kong and the mainland, Xinhua reported, citing a statement from the State Council.
China will also promote joint ventures among stock exchanges in Shanghai, Shenzhen and Hong Kong, the newspaper said. Cooperation over port, airport and rail transportation in the Pearl River Delta region will also receive support, according to the report.
The Philippine Stock Exchange Index (PCOMP) climbed 1.2 percent. The gauge is less than 1 percent short of its record close of 5,300.41 reached on May 3. Thailand’s SET Index jumped 1.3 percent and the Jakarta Composite Index (JCI) added 1.4 percent.
The Kospi Index closed little changed after a report showed confidence among South Korean manufacturers fell to the lowest level in four months.
Hyundai Motor Co. (005380), South Korea’s largest automaker, fell 3.1 percent. Its affiliate Kia Motors Corp. (000270) slipped 3.3 percent to its lowest level in five weeks in Seoul trading on concern protracted pay negotiations with the labor union will affect production.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 387 basis points, according to JPMorgan’s EMBI Global Index.
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