Emerging Stock Swings at 2006 Low as Consumer Shares Rise
Consumer companies and energy producers led an advance in the MSCI Emerging Markets Index (MXEF) as price swings dropped to the lowest level since 2006. Brazilian stocks jumped to a two-week high.
Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s biggest gas distributor, had the steepest gain on the emerging- markets gauge as Moscow-based OAO Gazprom agreed to cut the price of the fuel. BYD Co. (1211), the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., climbed to a six-month high after China Development Bank Corp. agreed to provide financing for some buyers of its vehicles. Brazilian steelmaker Usinas Siderurgicas de Minas Gerais SA rose the most since Sept. 13, following commodities higher.
The MSCI Emerging Markets Index added 0.5 percent to 1006.27 at the close of trading in New York. The gauge’s 30-day historical volatility slid to 8.48, the lowest level since January 2006, as U.S. voters decide today between giving President Barack Obama another four-year term or replacing him with Republican Mitt Romney. The Standard & Poor’s GSCI index of 24 raw materials rose 2.3 percent, the most in a month.
“The fact that we get some answers is reassuring,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview. “It may be just an euphoric reaction to knowing that at least we’re not going to have to deal with campaigning. If investors can move away from the concerns that have weighed on prices, there is the potential for equity markets to move higher.”
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, gained 0.8 percent to $41.13, the highest since Oct. 18. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, fell 1.9 percent.
Brazil’s Bovespa index added 2.1 percent and Russia’s Micex Index rose 0.4 percent on its fourth day of gains, led by utilities companies. India’s Sensex increased 0.3 percent, gaining for a fifth day, the longest winning streak since Sept. 17. The Istanbul Stock Exchange National 100 retreated 1 percent after surging to a record high yesterday.
South Korea’s Kospi index rose 1.1 percent to a two-week high, paced by automakers. The Philippine Stock Exchange Index advanced to a record for a second day after inflation slowed more than predicted by analysts to a four-month low. Metropolitan Bank & Trust Co. rallied for a fourth day after Deutsche Bank AG maintained its buy rating. The FTSE Bursa Malaysia KLCI Index fell 0.5 percent, the lowest close since Oct. 1.
The Turkish lira strengthened for a second day after Fitch Ratings yesterday raised Turkey’s foreign-currency debt ranking to investment grade. The Czech koruna weakened against the euro, leading losses among emerging-market currencies tracked by Bloomberg, as industrial production contracted the most since October 2009.
China’s yuan traded at the strong end of its permitted trading range on speculation banks are selling dollars before the U.S. election and the Chinese Communist Party Congress.
Equity trading volumes were lower than average today in Russia, with 29 percent fewer shares changing hands in Micex companies versus the 30-day average, according to data compiled by Bloomberg. Volumes were 12 percent higher on the Bovespa and 7.1 percent higher for companies on the Shanghai Composite gauge.
The MSCI emerging-market index has advanced 9.8 percent this year, trailing an 11 percent gain in the MSCI World Index. (MXWO) Shares in the developing markets gauge are valued at 11.6 times estimated earnings, a 14 percent discount versus the 13.4 multiple for the developed nations’ index.
PGNiG surged 9.6 percent in Warsaw, the most on record and the biggest jump in the MSCI index, after the company forecast its profit will jump by as much as 3 billion zloty ($390 million) this year because Gazprom, Russia’s natural-gas export monopoly, agreed to take market prices for natural gas into account when pricing sales to PGNiG, according to the Polish company’s statement.
Brazilian Usiminas was the second biggest advancer of the emerging markets gauge. Shares gained 6.8 percent, the most since Sept. 13.
Russia’s OAO MRSK Holding jumped 3.6 percent to a three- week high after a Kommersant report spurred bets investors will benefit from a consolidation. Federal Grid Co. will issue additional shares that will be added to MRSK’s capital, Kommersant reported today, citing people with knowledge of the talks. The government’s stake in MRSK Holding will exceed 85 percent following the consolidation, Kommersant said.
BYD rose 4.7 percent in Hong Kong to the highest since May after China Development Bank Corp. agreed to provide financing for some buyers of the company’s electric buses and taxis. The lender agreed to provide financing to buyers of BYD’s electric buses and taxis so that they need no down payment if the purchases are for public transportation, the automaker said in an e-mailed statement.
China Agri-Industries Holdings Ltd. (606), a producer of biochemicals and biofuel, declined 5.9 percent, the most since Aug. 15. The company plans to sell as much as 1.32 billion shares at HK$3.39 each in a three-for-10 rights offer.
Inotera Memories Inc. (3474) tumbled a record 6.8 percent in Taipei, as the Taiwan stock exchange imposed trading restrictions on the stock after its book value dropped below a minimum level amid slumping demand for computer memory chips.
Samsung Electronics Co., which more than doubled its shipment of tablets to 5.1 million in the third quarter, gained 0.6 percent in Seoul. Worldwide tablet shipments totaled 27.8 million in the third quarter, a 50 percent increase from a year earlier, researcher IDC said in a report today.
Hyundai rallied 4.3 percent after a 7.2 percent slide yesterday that was triggered by U.S. regulator findings that the company and unit Kia Motors Corp. (000270) overstated mileage claims on some of their vehicles.
OGX Petroleo e Gas Participacoes SA (OGXP3), the Brazilian oil company controlled by billionaire Eike Batista, climbed 6.2 percent as crude gained the most in a month on forecasts that U.S. gasoline supplies dropped after Hurricane Sandy forced the shutdown of East Coast refineries. Petroleo Brasileiro SA (PETR4), Brazil’s state-controlled oil producer, rose 2.1 percent.
SapuraKencana Petroleum Bhd. (SAKP), Malaysia’s biggest oil and gas services company, jumped 6.3 percent after agreeing to buy Seadrill’s tender-rig operations in a $2.9 billion deal.
Drugmaker Cipla Ltd. surged to a record in Mumbai, adding 4.4 percent after getting U.S. regulatory approval to export to the world’s biggest economy. The Food and Drug Administration approved the company’s plant at Indore a week ago, Chief Financial Officer V.S. Mani said yesterday after Cipla reported a record second-quarter profit.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell eight basis points, or 0.08 percentage point, to 282, according to JPMorgan Chase & Co.’s EMBI Global Index.