Emerging Stocks Advance a Fifth Day on Interest-Rate Speculation

Emerging-market stocks rose, sending the benchmark index to the longest rally since April, as speculation of more interest-rate cuts by central banks outweighed data showing weaker manufacturing in Asia.

The MSCI Emerging Markets Index (MXEF) added 0.2 percent to 954.22, with 432 companies gaining to 329 declining. Homebuilder Rossi Residencial SA and state controlled oil company Petroleo Brasileiro SA (PETR4) led Brazilian stocks higher. Russia’s Micex Index climbed, led higher by OAO Mechel, the country’s biggest maker of coking coal. Anhui Conch (914) Cement Co. surged in Hong Kong after the government pledged to ensure stable economic growth.

The Federal Open Market Committee “will provide additional accommodation as needed” to boost economic recovery, it said at the conclusion of a two-day meeting in Washington. A purchasing managers’ index released today showed China’s manufacturing industry grew at the slowest pace in eight months in July. The European Central Bank will announce a policy decision tomorrow after ECB President Mario Draghi last week pledged to do “whatever it takes” to preserve the euro.

“It’s the reaction toward comments from different authorities and that has continued into this week,” Elena Ogram, a portfolio manager at Bank am Bellevue AG in Zurich, which manages about $50 million of emerging-market equity assets, said by phone. “Markets expect some sort of quantitative easing from either the ECB or the Federal Reserve or both.”

EM ETF Gains

The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, rose 0.2 percent to $39.19, the first rise in three days. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, gained 1.9 percent to 27.48.

The Bovespa rose 0.3 percent in Sao Paulo, with Rossi adding 8.6 percent, the most in two weeks. Petrobras climbed 1.6 percent, its fifth increase in six days.

Russia’s Micex index advanced 0.3 percent as Mechel gained 6.6 percent after reporting that first half coking coal concentrate sales rose.

China’s Purchasing Managers Index unexpectedly fell to 50.1 in July, a government report showed today. Fifty marks the line between expansion and contraction. South Korea’s exports slid by more than double the amount forecast by analysts.

South African Shares

The FTSE/JSE Africa All Share Index (JALSH) increased 1.4 percent in Johannesburg, as Anglo American Platinum Ltd. (AMS), the largest producer of the metal, advanced 1.2 percent. MTN Group Ltd. (MTN), Africa’s biggest mobile-phone company, gained 4.1 percent.

The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong rose 0.9 percent for its a fourth consecutive advance, its longest winning streak in six months. The Shanghai Composite Index (SHCOMP) also gained 0.9 percent, the most in three weeks and up from the lowest close since March 2009.

Anhui Conch jumped 4.4 percent in Hong Kong, leading cement makers higher in its largest rise since March 27. The China Securities Journal said the nation’s economic planners may allow local governments to sell subway and railway bonds to support infrastructure projects.

MediaTek Inc. (2454), a chip designer, rose 6.9 percent, the most since February, after the company said second-quarter profit was NT$3.36 billion ($112.2 million), exceeding analysts’ estimate of NT$3.2 billion.

Lenovo Surges

Lenovo Group Ltd. (992), the second-biggest personal-computer maker, jumped 6.9 percent in Hong Kong, the most since Jan. 19. The company agreed to resell machines made by EMC Corp.

The Sensitive Index (SENSEX), or Sensex, rose 0.1 percent in Mumbai with Coal India Ltd. (COAL), the world’s biggest producer, falling the most since Feb. 16 amid India’s worst-ever power crisis. A blackout yesterday across the north and east of the country, the second in two days, left more than 640 million people without electricity. India’s government controls the price of electricity and the coal used to produce it. That crimps utilities’ profitability and investment.

South Korean bonds rose, building on a run of four monthly gains, as data showing a slide in exports and the slowest inflation since 2000 fanned speculation the central bank will cut interest rates. The yield on South Korea’s 3.25 percent notes due June 2015 slipped two basis points, or 0.02 percentage point, to 2.83 percent at the close in Seoul, Korea Exchange Inc. prices show.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell nine basis points, or 0.09 percentage point, to 333, according to JPMorgan Chase & Co.’s EMBI Global Index.

-- Editors: Linda Shen, Peter Branton

To contact the reporters on this story: Jason Webb in London at jwebb25@bloomberg.net; Sridhar Natarajan in New York at snatarajan15@bloomberg.net

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

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