Emerging Stocks Rise as Volatility Hits 2004 Low on China

Emerging-market stocks advanced for a fourth day, with price swings in the benchmark index falling to an eight-year low, as a gauge of Chinese manufacturing climbed and Israel agreed to a cease-fire with Hamas.

MRV Engenharia e Participacoes SA led homebuilders higher in Sao Paulo after an inflation report spurred speculation Brazil will be able to keep borrowing costs at a record low. Samsung Electronics Co. (005930), the world’s largest maker of televisions and mobile phones, pushed a gauge of technology companies to a two-week high. OAO RusHydro had the biggest gain in more than two months as Russian President Vladimir Putin approved a cash injection for the country’s largest renewable energy producer. Israel’s shekel climbed versus the dollar.

The MSCI Emerging Markets Index (MXEF) rose 0.5 percent to 985.72 in New York, its highest close since Nov. 12. The index’s 50-day volatility fell to 9.11, the lowest since Sept. 2004. A Chinese manufacturing index signaled the first expansion in 13 months, a survey of purchasing managers showed. Israel and the Palestinian militant group Hamas agreed to a cease-fire yesterday after talks brokered by Egypt’s Islamist leaders and the U.S.

The China report “was better than expected and indicates the economy has possibly begun expanding again,” Christopher Palmer, who helps manage $2.5 billion of assets as a London- based director of global emerging markets for Henderson Global Investors Ltd., said by e-mail. “For most investors China remains the main show.”

The preliminary reading was 50.4 for the Chinese purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics. That compares with a final level of 49.5 for October. A reading above 50 indicates expansion.

‘Excessive’ Fluctuations

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong gained 0.9 percent to a two-week high. China’s Shanghai Composite Index slid 0.7 percent, following the benchmark index’s biggest gain in three weeks, as waning speculation of lower bank reserve requirements overshadowed the increase in the manufacturing gauge.

Russia’s Micex lost 0.2 percent and Brazil’s Bovespa advanced 0.3 percent. South Korea’s Kospi index rose 0.8 percent to its highest close since Nov. 12.

Brazil’s real was the worst performer among emerging market currencies monitored by Bloomberg, dropping to a three-year low. Finance Minister Guido Mantega said the currency was on a “normal trajectory,” encouraging speculation that the central bank will let it stay weak.

Israel’s shekel strengthened as much as 1 percent to 3.8581 versus the dollar before ending with a 0.5 percent gain at 3.8767.

Low Volumes

The MSCI Emerging Markets/Information Technology Index (MXEF0IT) gained 1.1 percent, the most among 10 industry groups. The broader emerging-markets gauge has risen 7.6 percent this year, compared with a 9.1 percent advance in the MSCI World Index. (MXWO) The developing-nations measure trades at 11.4 times estimated earnings, compared with the MSCI World’s multiple of 13.3, data compiled by Bloomberg show.

Trading volumes for the Shanghai Composite were 28 percent below the 30-day average and 12 percent lower for Taiwan’s Taiex Index, data compiled by Bloomberg show. Volume was down 30 percent on Russia’s Micex Index and 54 percent on Mexico’s IPC Index versus the 30-day average, the data show. U.S. markets are closed today for Thanksgiving.

A report from the Brazilian national statistics agency showed inflation slowed in November, boosting homebuilders. MRV surged 2.8 percent and Cyrela Brazil Realty SA Empreendimentos e Participacoes (CYRE3) added 1.9 percent.

RusHydro Gains

RusHydro gained 3.8 percent, the most since Sept. 14. Putin signed a decree approving a government proposal to provide RusHydro with as much as 50 billion rubles ($1.6 billion) from the budget this year and allowing the company to issue additional shares to increase its capital, according to an e- mailed copy of the document.

ArcelorMittal South Africa Ltd. surged 6.8 percent in Johannesburg, leading gains among emerging-market stocks, on speculation that a drop to the lowest level since 2003 was overdone. The stock had fallen for 12 consecutive days through Nov. 20, when the company announced Matthias Wellhausen would replace Rudolph Torlage as chief financial officer.

TVN SA (TVN) gained 1.3 percent to a three-month high, after Raiffeisen Centrobank AG raised Poland’s second-largest television network to buy from hold.

Samsung Electronics jumped 2.4 percent to a record. Apple Inc. was ordered by a federal judge in its patent lawsuit against Samsung to disclose licensing terms of a settlement with HTC Corp. Samsung had argued the terms of the licensing agreement are “highly relevant” to Apple’s request for an order blocking U.S. sales of Samsung smartphones.

Cigarettes, Noodles

National Societe Generale Bank, Societe Generale SA’s Egyptian unit, fell 5.1 percent to the lowest since Sept. 24. Egyptian Financial Supervisory Authority extended Qatar National Bank’s due diligence process until Feb. 20 to make an offer for a stake in SocGen’s unit.

Bank of the Philippine Islands advanced 1.8 percent in Manila to a record high. The bank said it’s in talks with the Lucio Tan Group for a merger with Philippine National Bank that could create the nation’s biggest lender by assets.

Cigarette company PT Gudang Garam (GGRM) jumped 6.6 percent and noodle maker PT Indofood Sukses Makmur (INDF) added 3.6 percent, leading gains in Indonesian consumer stocks, on speculation a potential increase in minimum wages will boost sales.

Wuliangye Yibin Co. slumped 4.7 percent to the lowest level since July 2010, leading Chinese liquor makers lower, after Xinhua News Agency cited the nation’s quality watchdog as saying samples made by JiuGuiJiu Co. contain excessive levels of plasticizer.

JCY International Bhd. (JCYH), a Malaysian supplier of hard disk- drive components, tumbled 17 percent in Kuala Lumpur, the steepest loss on record, after its fourth-quarter profit slid 59 percent from a year earlier.

To contact the reporters on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net; Maria Levitov in London at mlevitov@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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