Emerging-market stocks rose the most this month as speculation increased that central banks will step up efforts to bolster economic growth.
The MSCI Emerging Markets Index (MXEF) jumped 2.8 percent to 941.76, its biggest gain since June 29. Brazil’s benchmark stock index rose to a five-week high led by oil companies Petroleo Brasileiro SA and OGX Petroleo & Gas Participacoes SA. Samsung Electronics Co. (005930), the world’s largest maker of televisions and mobile phones, surged the most in eight months in Seoul after forecasting higher demand for panels and handsets.
European Central Bank President Mario Draghi will hold talks with Bundesbank President Jens Weidmann, according to two central bank officials, as he builds consensus for new stimulus measures. Gross domestic product in the world’s largest economy rose at a 1.5 percent annual rate after a revised 2 percent gain in the prior quarter, Commerce Department figures showed today in Washington. A drop in Chinese industrial companies’ profits for a third month spurred speculation Premier Wen Jiabao will add stimulus.
“Everybody is thinking bond purchases and it’s just a pretty good signal that would favor risky assets,” Benoit Anne, Societe Generale’s London-based head of emerging-market strategy, said by phone. “As a result emerging market equities would benefit overall and it’s a boost for risk sentiment.”
The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, rose for the third day, gaining 2.8 percent to a three-week high of $39.53. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, declined 2.8 percent to 25.27.
Brazil’s Bovespa Index gained 4.7 percent, the most in nearly a year. OGX Petroleo & Gas Participacoes SA surged 13 percent and Petrobras advanced by 4.7 percent.
Draghi’s proposal involves Europe’s rescue funds buying government bonds on the primary market, flanked by ECB purchases on the secondary market to ensure transmission of its record-low interest rates, said the bank officials on condition of anonymity because the talks are private.
South Korea’s Kospi index led gains among emerging-market gauges, climbing 2.6 percent, the most since January and the won appreciated 0.8 percent against the dollar. Bank of Korea data showed South Korea’s current-account surplus widened to a record $5.8 billion last month as imports declined.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong advanced 2 percent and the BSE India Sensitive Index (SENSEX) rose 1.2 percent. The FTSE/JSE Africa All Share Index (JALSH) added 1 percent.
The Micex Index rose 1.6 percent in Russia. OAO Gazprom, the world’s largest natural gas producer, gained 2.6 percent.
Samsung, LG Display
A gauge of technology companies climbed 4 percent, the steepest advance since Dec. 21 and the most among all 10 industry groups in the MSCI Emerging Markets Index.
Samsung shares jumped 5.2 percent. Emerging markets may spur demand for digital appliances, Asia’s biggest electronics maker said today. The company also retained its position as the world’s biggest phone seller. Second-quarter profit climbed 48 percent to a record 5.19 trillion won ($4.5 billion), trailing some analysts’ estimates.
LG Display Co., the No. 2 maker of liquid-crystal displays, surged 6.9 percent in Seoul. The company, which posted a second- quarter loss yesterday, may turn to an operating profit of about 290 billion won in the third quarter ending Sept. 30 before earning 430 billion won in the final quarter of 2012, Woori Investment & Securities Co. said.
“This month will be the bottom for panel shipments, and earnings are likely to improve significantly starting from August,” Jeff Kim, an analyst at Hyundai Securities Co., wrote in a report today. Kim raised his share price estimate by 25 percent to 35,000 won.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 17 basis points, or 0.17 percentage point, to 344, according to JPMorgan Chase & Co.’s EMBI Global Index.
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