Most Emerging Stocks Gain on Stimulus Hope, Vehicle Sales

Most emerging-market stocks rose, led by consumer companies, after automakers beat estimates for U.S. sales and on speculation that Chinese and European central banks will ease monetary policy.

The MSCI Emerging Markets Index (MXEF) was little changed at 956.26 at the close in New York, with 442 stocks advancing and 308 declining. Brazil’s Bovespa (IBOV) index rose 0.5 percent, led by raw-materials producers such as Usinas Siderurgicas de Minas Gerais SA (USIM5) and Cia. Hyundai Motor Co. (005380), South Korea’s biggest carmaker, climbed the most in two weeks as it sold more cars in the U.S. The Hang Seng China Enterprises Index (HSCEI) of Chinese stocks listed in Hong Kong fell 0.3 percent. The Micex Index (INDEXCF) gained 0.5 percent in Moscow.

The European Central Bank will cut interest rates tomorrow, according to a Bloomberg survey of economists. The 21 countries in the developing-nation gauge send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show. A government-linked newspaper in China said policy makers may lower lenders’ reserve requirements three more times this year.

“Following the European Union summit-induced recovery since last week, emerging market equities took a breather and are watching tomorrow’s European central bank meeting,” Simon Quijano-Evans, head of emerging-market research at ING Groep NV in London, said by e-mail.

The ECB will lower its benchmark rate by 25 basis points to a record low 0.75 percent tomorrow, according to the median forecast in a Bloomberg survey of 57 economists.

Usiminas, Oi

Brazil’s Bovespa led gains among major Latin American indexes. Usiminas, as Usinas Siderurgicas is known, advanced 3.2 percent to the highest in two weeks. Steelmaker Cia. Siderurgica Nacional SA rose 3.1 percent and Oi SA, Brazil’s fourth-largest telecommunications operator by market value, jumped 4.6 percent, following a 6 percent advance yesterday.

Mexico’s Grupo Elektra SAB (ELEKTRA*) rose 3.1 percent after a judge temporarily blocked Mexico’s stock exchange from changing the way it calculates its weightings for the IPC index, which would have reduced Elektra’s presence.

Hyundai jumped 1.7 percent in Seoul, the most since June 19. Hyundai and its affiliate Kia combined to sell 10 percent more vehicles in the U.S. in June than a year earlier, exceeding the 9.8 percent increase that was the average of six analysts’ estimates.

Russia’s Micex gauge posted its fourth day of gains and Turkey’s ISE National 100 Index (XU100) rose 0.4 percent.

The FTSE/JSE Africa All Share Index advanced 0.2 percent in Johannesburg.

Consumer Stocks

An index of emerging-market consumer discretionary stocks advanced 0.7 percent, the most of any of 10 industry groups in the MSCI gauge.

“The chatter in markets has quickly changed from gloom scenarios to a reflection on how unreasonably cheap emerging- market equities have become,” Chris Weafer, chief strategist at Troika Dialog in Moscow, said in an e-mail to clients.

The developing nation gauge has advanced 4.4 percent this year, compared with a 5.7 percent gain in the MSCI World Index. Shares in the emerging-markets index are trading at 10.2 times estimated earnings, compared with the MSCI World’s multiple of 12.4, according to data compiled by Bloomberg. U.S. financial markets were closed today for the Fourth of July holiday.

The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps added one basis point to 277, according to data compiled by Bloomberg.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 364, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact Bloomberg News staff for this story: Jason Webb in London at jwebb25@bloomberg.net; Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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