Emerging-market stocks posted their biggest gain in two months, led by resource shares, as oil and commodity prices gained on prospects the U.S. budget crisis will be resolved, bolstering the world’s largest economy.
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, rose 1.7 percent, the most since Sept. 13. Russia’s Micex and Brazil’s Bovespa advanced as oil surged. Turkish Airlines (THYAO) jumped the most in three years as earnings beat estimates and talks on cooperating with Deutsche Lufthansa AG progressed. Utility Centrais Eletricas Brasileiras SA (ELET6) fell the most in 15 years after Barclays Plc cut the stock to sell. Shandong Weigao Group Medical Polymer Co. led declines on the emerging markets gauge after third-quarter earnings missed analysts’ estimates.
The MSCI Emerging Markets Index (MXEF) added 0.8 percent to 977.98, the biggest gain since Sept. 14, snapping a seven-day losing streak. U.S. President Barack Obama started a new round of deficit-reduction talks with congressional leaders on Nov. 16 to avoid automatic tax increases and spending cuts that threaten to throw the country into a recession. Crude oil advanced to the highest level in a month amid concern that Middle East unrest will disrupt supply.
“There’s now the emerging hope that a deal to address the U.S. budget deficit will be reached,” Aryam Vazquez, an economist at Wells Fargo & Co., said by phone from New York. “That’s the key catalyst behind this risk-on climate that we’re seeing, particularly in emerging-market assets. And oil is more a reflection of tensions in the Middle East.”
The S&P GSCI Spot Index rose 2.1 percent to the highest level in a month. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, sank 12 percent, the most in almost a year.
Existing home sales in the U.S. climbed more than forecast last month and a gauge of builder confidence reached a six-year high, bolstering confidence in the housing market.
“With improved news flow of progress being made on bipartisan talks regarding the fiscal cliff, we are seeing a technical relief rally in equity markets today,” Geoffrey Ng, who helps oversee $1.8 billion as chief executive officer at Hong Leong Asset Management Bhd. in Kuala Lumpur, wrote in an e- mail. “Investors remain guarded and apprehensive for a quick fix to the fiscal cliff issue.”
Brazil’s Bovespa index rose 1.9 percent, the biggest gain since Nov. 6, as commodity producers followed raw materials higher. OGX Petroleo e Gas Participacoes SA surged 7.5 percent, the most since July 27, and steelmaker Usinas Siderurgicas de Minas Gerais SA jumped 6.4 percent.
South Korea’s Kospi (KOSPI) index climbed 0.9 percent and Russia’s Micex Index (INDEXCF) added 1.1 percent, the most in a month. The Shanghai Composite Index rebounded in the final hour of trading after dipping below 2,000, rising 0.1 percent from earlier losses of as much as 0.9 percent. Its trading volumes were about 31 percent below the 30-day average, data compiled by Bloomberg show. Mexico’s IPC index was closed for a local holiday.
Gauges of raw material and energy in the MSCI Emerging Markets Index advanced at least 1.4 percent. They led gains among the 10 industry groups, rebounding from at least seven days of declines.
The MSCI Emerging Markets Index has climbed 6.7 percent this year, compared with the 8.3 percent gain by the MSCI World Index (MXWO) of developed countries. The emerging-markets gauge trades at 11.3 times estimated profit, compared with the MSCI World’s 13.2, according to data compiled by Bloomberg.
“I am confident we can get our fiscal situation dealt with,” Obama said in Bangkok yesterday, where he began a three- nation trip in Southeast Asia that includes the first visit by a sitting U.S. president to Myanmar.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 7 basis points, or 0.07 percentage point, to 301 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
South Korea’s won rebounded from its worst week in four months, strengthening 0.5 percent versus the dollar. Russia’s ruble strengthened 0.7 percent versus the dollar as crude advanced.
Preferred shares of Eletrobras, as Centrais Eletricas is known, tumbled 15 percent, the most since Oct. 1997 on volume that was triple the three-month average, according to data compiled by Bloomberg. Barclays cut the stock to the equivalent of sell from neutral because of “unfavorable” conditions to renew licenses under a government plan to cut rates.
OTP Bank Nyrt. slid 2.8 percent in Budapest, the most in a month. Hungary will raise taxes to narrow 2013 budget deficit, the Economy Ministry said late Nov. 16. The bank tax will stay “permanently,” it said.
Turkish Airlines surged 9.1 percent in Istanbul, the most since October 2009. The carrier is examining potential for stronger ties short of equity investments, Turkish Finance Minister Mehmet Simsek said today in Ankara. The airline reported third-quarter net income of 704.6 million liras ($391 million) beating the average 452 million-lira estimate of 14 analysts surveyed by Bloomberg.
Shandong Weigao plunged 17 percent, the most in four years, in Hong Kong trading. Third-quarter earnings rose 8.8 percent to 271.3 million yuan ($44 million), missing the 318.7 million-yuan average of three analyst estimates compiled by Bloomberg.
Saudi Arabia’s benchmark stock index, the Tadawul All Share Index (SASEIDX), fell for an eighth day, the longest losing streak since March 2011, amid speculation about the king’s health after he underwent a back surgery.
OAO Novatek gained 2.5 percent, the most since Oct. 31, after the country’s second-biggest natural-gas company said it will start its buyback program.
Impala Platinum Holdings Ltd. (IMP) surged 5.7 percent in South Africa, the most since Sept. 7, as Nomura upgraded its recommendation to buy from reduce.
Tata Global Beverages Ltd. (TGBL), Starbucks Corp.’s Indian partner, declined 5.3 percent in Mumbai, the most since February. Morgan Stanley downgraded its recommendation on the stock to the equivalent of sell on concern there will be limited gains from its venture with Starbucks.
Kangwon Land Inc. (035250), a casino and hotel services provider, jumped 5.1 percent in Seoul, the most since September 2011. Korea’s Ministry of Culture, Sports and Tourism will approve as early as this month a plan by the company to increase casino tables and slot machines, MoneyToday reported on Nov. 16, citing unidentified industry officials. Kim Hong Dae, a spokesman for Kangwon Land, declined to comment, while Lee Jun Hyub, an official at the ministry’s tourism promotion division, said nothing has been decided.