Emerging-market stocks gained as the prospect that central banks in the U.S. and developing nations will take measures to stimulate their economies offset a lower global growth forecast from the International Monetary Fund.
The MSCI Emerging Markets Index (MXEF) added 0.1 percent to 926.73 at 5:30 p.m. in New York, with 375 companies advancing and 364 declining. Mexico’s IPC (MEXBOL) index gained 1 percent, led by Grupo Elektra SA (ELEKTRA*), the retail and banking company controlled by billionaire Ricardo Salinas. Russia’s benchmark Micex gauge rose 0.4 percent and Hungary’s BUX Index (BUX) climbed 1.2 percent. Brazil’s Bovespa stock index fell from a one-week high and mining companies Vale SA (VALE3) and MMX Mineracao & Metalicos SA slumped on concern China’s slowdown may hurt exports.
Investors speculated that Federal Reserve Chairman Ben S. Bernanke may highlight the need for low borrowing costs to spur the world’s largest economy when he speaks tomorrow before the Senate Banking committee. Chinese authorities may announce measures to boost their economy following a cabinet meeting this week after the IMF cut its 2013 global growth forecast to 3.9 percent from 4.1 percent in April, and reduced projections for China’s growth this year to 8 percent from 8.2 percent.
“There remains the hope, and to some degree the probability, that central banks in emerging markets, principally China, and the U.S. Federal Reserve, will continue to ease monetary policy in an effort to fuel forward growth,” Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion, said in a phone interview. “Perhaps then, investors will be able to focus on fundamentals and valuations rather than trying to handicap the next policy-maker moves.”
EM ETF Drops
MSCI’s index of developing nations, which has gained 1.1 percent this year, trades at a multiple of 10.1 percent estimated earnings, compared with 12.3 for the MSCI World Index of developed nations, which has advanced 3.6 percent in 2012, according to data compiled by Bloomberg.
The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, dropped 0.2 percent to $38.40.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, gained 1.1 percent to 26.64.
The Bovespa slid 1.7 percent to a two-week low. Vale fell 1.4 percent while MMX tumbled 7.1 percent. OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, retreated 6.2 percent as Deutsche Bank AG lowered its recommendation to sell from hold. Mexico’s Grupo Elektra surged 7.1 percent, the most in two months.
The Micex index’s advance was led by Federal Grid Co., which gained 2.6 percent. South Africa’s FTSE/JSE Africa All Share Index (JALSH) slipped 0.2 percent. FHB Mortgage Bank Nyrt. jumped 1.7 percent and was the third-biggest gainer on the BUX.
The Shanghai Composite Index fell 1.7 percent, its lowest close since March 2009. Suning Appliance Co., China’s biggest electronics retailer by market value, slid the most on record in Shanghai after estimating profit dropped as much as 30 percent in the first six months of the year. India’s Sensex dropped 0.6 percent.
China’s central bank may cut interest rates by as much as one percentage point in the coming year to spur lending, the swap market signals. China’s State Council may this week give details of easing measures to support growth after provincial visits by Wen and Vice Premier Li Keqiang, Nomura Holdings Inc. said in a note today.
State Bank of India, the country’s largest lender, advanced 1 percent on speculation of a rate cut. Reserve Bank of India Governor Duvvuri Subbarao announces his next rate decision on July 31, following a 0.5 percentage-point reduction in April.
ZTE Corp. (000063), a Chinese telecommunications equipment maker, dropped 16 percent, the most since October 2008, after the company said first-half net income may be between 154 million yuan ($24 million) and 308 million yuan, sliding from 769.3 million yuan a year earlier.
BYD Co. (1211), the automaker backed by investor Warren Buffett, tumbled 5.9 percent in Hong Kong. China’s automobile dealers will increase incentives and discounts as they struggle with a worsening glut in the world’s biggest vehicle market, according to Cheng Xiaodong, head of a unit that monitors auto prices at the National Development and Reform Commission.