Most emerging-market stocks rose as speculation central banks in the U.S., Europe and China will boost efforts to lift growth outweighed concern that a global slump will damp earnings.
The MSCI Emerging Markets Index (MXEF) was little changed at 967.85 in New York as 393 stocks advanced and 373 declined. Gauges in India, Russia and China rose and China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the country’s biggest shipbuilder outside state control, surged the most in nine months in Hong Kong. Brazil’s Bovespa stock index fell for the first time in three days, led by steelmaker Usinas Siderurgicas de Minas Gerais SA and homebuilder Rossi Residencial SA.
Federal Reserve Bank of Boston President Eric Rosengren said on CNBC that the central bank should pursue an “open- ended” easing program of “substantial magnitude” to boost growth and hiring. German Chancellor Angela Merkel backed a bond-buying plan announced last week by the ECB, a spokesman said yesterday. Earnings announcements by companies in the developing-nations gauge so far this quarter have surpassed analyst estimates by an average 20 percent, according to data compiled by Bloomberg.
“Investors look for reasons to buy, and when there’s a signal something may happen, they are buying into risky asset classes,” Michael Ganske, head of emerging-markets research at Commerzbank in London, said by phone. “There also seems to be a push in Germany to be more cooperative with the ECB.”
EM ETF Gains
The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, climbed 0.3 percent to $40.29, the highest since May 10. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, dropped 1.2 percent to 24.29.
Without new stimulus, the U.S. jobless rate would rise to 8.4 percent at the end of this year and economic growth wouldn’t exceed its 1.75 percent average in the first half of the year, Rosengren said today in a CNBC interview. The German government is “not worried” by European Central Bank President Mario Draghi’s proposals on bond buying to help bring down borrowing costs in Spain and Italy, a spokesman said yesterday.
German factory orders declined more than twice as much as economists forecast in June as sales to euro-area countries slumped, according to data from the Economy Ministry and a Bloomberg survey. The 21 nations in the MSCI emerging market gauge send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show.
The People’s Bank of China has cut interest rates twice since early June and lowered lenders’ reserve requirements as policy makers in the world’s second-largest economy seek to bolster growth that has slowed to a three-year low.
The Bovespa fell 1.1 percent and Usiminas, as Usinas Siderurgicas is known, fell for the first time in three days, tumbling 8.5 percent. Rossi Residencial SA lost 7 percent.
The Hang Seng China Enterprises Index (VXEEM) of Chinese stocks listed in Hong Kong climbed 0.4 percent, to its highest close in 10 weeks. The BSE India Sensitive Index (SENSEX) added 1.1 percent to a one-month high as Tata Motors Ltd. jumped 4.3 percent.
China Rongsheng, which earned about 64 percent of its 2011 revenue from overseas, jumped 11 percent, its second day of gains after four consecutive weeks of decline.
“China Rongsheng as well as other companies in the shipping sector are benefiting from the improved sentiment that the European debt crisis may be eased,” Lawrence Li, an analyst at UOB-Kay Hian Holdings Ltd, said by phone today. “Given that Rongsheng shares have slumped so much over the past month, some investors may view this as a buy-in opportunity.”
HTC, NHN Decline
HTC Corp. (2498) , Asia’s second-biggest smartphone maker, dropped 7 percent, the most in a month, after it forecast third-quarter revenue of as much as NT$80 billion ($2.67 billion), less than analyst estimates of NT$87 billion.
NHN Corp. (035420), South Korea’s largest Internet search-engine operator, fell 3.5 percent in Seoul after Mirae Asset Securities said the company’s second-quarter earnings may fall short of market expectations.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 8 basis points, or 0.08 percentage point, to 314 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
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