Emerging-market stocks rose, sending the benchmark index (VXEEM) to a three-month high, as bigger-than- forecast drops in German exports and manufacturing fanned speculation central banks will take steps to bolster growth.
The MSCI Emerging Markets Index gained 0.3 percent to 970.6, the highest since May 11. Brazil’s Bovespa stock index rose the most among the world’s major equity benchmarks, led by homebuilder Gafisa SA and steelmaker Usinas Siderurgicas de Minas Gerais SA. Samsung Electronics Co. (005930), South Korea’s biggest shipper of consumer electronics, led exporters higher.
German industrial production declined in June from a month earlier while exports also slumped, pointing to a slowdown in the euro zone’s strongest economy. The Bank of Korea is set to consider cutting repurchase rates for a second month tomorrow. A government report the same day may also show inflation slowed in China, widening the scope for more policy easing in the world’s second-biggest economy.
“Central banks across emerging markets have a little bit more room to stimulate the economy and the prospect of that is lifting the stocks,” Ed Kuczma, who helps manage $34 billion at Van Eck Associates Corp., said by phone from New York. “If no measure is announced, it only means the economic condition is not as severe as people have been thinking.”
The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, increased 0.2 percent. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, fell 2.3 percent.
The Bovespa climbed 2.1 percent, boosted by an 8.2 percent gain for Gafisa. Preferred shares of Usiminas, as the Belo Horizonte, Brazil-based company is known, rose 5.8 percent as the stock recovers from an eight-year low reached on July 23.
Goldman Sachs increased its estimates for Usiminas’ earnings before interest, taxes, depreciation and amortization in the 2012-2014 period by 13 percent, analysts led by Marcelo Aguiar in Sao Paulo said in a note to clients on Aug. 6.
Production in Germany fell 0.9 percent from May, when it gained a revised 1.7 percent, the Economy Ministry in Berlin said today. Economists had forecast a drop of 0.8 percent, the median of 34 estimates compiled by Bloomberg. Exports fell 1.5 percent, exceeding the median estimate among economists for a 1.3 percent decline.
Philippine financial markets and offices reopened today even as a fifth of the Manila region remained under water after the worst flood in three years.
Energy companies led gains in the emerging-markets index, while a measure of consumer staples companies posted the largest decline. The broader measure has advanced 5.9 percent this year, compared with a 7.9 percent increase in the MSCI World Index. (MXWO) The emerging-markets gauge trades at 10.7 times estimated earnings, compared with 12.9 for the developed-nations measure, data compiled by Bloomberg show.
NCsoft Corp. (036570), an online-game maker, slid 4.7 percent in Seoul after reporting a loss. Bharti Airtel Ltd. (BHARTI), India’s largest mobile-phone operator, fell 6.6 percent to a two-year low after profit missed analysts’ estimates. Air China Ltd. (753) dropped 4.3 percent in Hong Kong after scrapping flights to Shanghai because of a typhoon. China Southern Airlines Co. lost 3.2 percent and China Eastern Airlines Corp. fell 1.5 percent.
Samsung Electronics added 2 percent in Seoul, reaching the highest close since May 10.
Chimei Innolux Corp. (3481), Taiwan’s largest maker of liquid- crystal displays, jumped 7 percent in Taipei, the biggest gain in the MSCI Emerging Markets Index. (MXEF) The company said yesterday its second-quarter net loss narrowed to NT$9.57 billion ($320 million).
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell three basis points, or 0.03 percentage point, to 312 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.