Emerging Stocks Rise to One-Week High on PBOC Injection
Emerging-market stocks advanced for the first time in three days, as rising commodities boosted producers and China injected record funds into the banking system.
The MSCI Emerging Markets Index (MXEF) added 0.6 percent to 974.98. Grupo Mexico SAB, Mexico’s largest copper producer, rose the most since Aug. 3. Chinese port operator Chongqing Gangjiu Co. (600279) surged the most since April 2010. Brazil’s Bovespa stock index dropped with homebuilder MRV Engenharia & Participacoes SA falling the most in three weeks.
The People’s Bank of China conducted 220 billion yuan ($34.6 billion) of reverse-repurchase operations today, according to a trader at a primary dealer required to bid at the auctions. That’s the biggest one-day injection since the current round of reverse repos started in late June. Brent crude, corn and wheat have led a rally in the Standard & Poor’s GSCI gauge of 24 raw materials from a low on June 21, lifting the index (VXEEM) more than the 20 percent threshold that signals a bull market.
“The central bank’s move is going to be exceedingly important as emerging markets are largely reliant on China’s consumption demand,” Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion, said by phone. “A lot of emerging- market countries are in the business of exporting resource-laden materials and any increase in a commodities gauge indicates consumption of stuff being exported.”
EM ETF Declines
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, slid 0.1 percent. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, advanced 4.8 percent.
The Bovespa declined 0.6 percent with MRV Engenharia & Participacoes falling the most since Aug. 2. Grupo Mexico (GMEXICOB) gained 1.4 percent, the most since Aug. 3, as copper rose to the highest in more than four weeks.
Purchases of new and existing houses in the U.S. probably rose in July and bookings for durable goods climbed the most this year, economists said before reports this week.
The extra yield investors demand to own emerging-market bonds over U.S. Treasuries fell two basis points, or 0.02 percentage point, to 313, according to JPMorgan Chase & Co.’s EMBI Global Index.
Vietnam’s VN Index tumbled 4.7 percent, the biggest decline among 93 global indexes tracked by Bloomberg, after the Tuoi Tre newspaper said a founding shareholder of several of the nation’s banks has been detained by police.
Russia’s Micex Index (INDEXCF) of 30 stocks rallied 1.8 percent, the most since July 3. OAO Gazprom Neft, a Russian oil company, jumped 2.2 percent and OAO Novatek, a natural gas producer, climbed 3.6 percent. Crude rose 0.7 percent to $96.68 a barrel in New York.
India’s BSE India Sensitive Index (SENSEX) rose 1.1 percent amid bets the government may implement measures to bolster economic growth. Infosys rose 2.5 percent after an Alabama District judge found no basis to support the charges made in a case filed against the company last year alleging it misused visa permits, Infosys said.
Chongqing Gangjiu, a port operator, rallied by the 10 percent daily limit. Chongqing Road & Bridge Co. (600106), a toll-road operator, added 6.1 percent. Gome Electrical Appliances Holding Ltd. (493) jumped 14 percent after the Economic Information Daily reported China may issue new policies to spur consumption.
Chongqing municipality plans to boost industrial investment to 1.5 trillion yuan ($236 billion) in the five years through 2015, Xinhua said today, citing the local government. The investment will help Chongqing expand its total industrial output beyond 3 trillion yuan, the report said.
“We continue to expect these city-level initiatives to help the economy to rebound in the second half,” Zhang Zhiwei, China economist at Nomura Holdings Inc., said in a note.
Hon Hai Precision Industry Co. (2317), which assembles Apple Inc. products, gained 1.3 percent in Taipei after Apple’s market value rose to a record amid optimism its new iPhone will attract high demand.
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