Emerging-Market Stocks Gain on Commodity Rebound, Profit Outlook
Emerging-market equities rose for a third day as higher commodities’ prices bolstered material stocks and earnings prospects improved for companies from China Steel Corp. (2002) to Aeon Thana Sinsap Thailand Pcl. (AEONTS)
China Steel climbed the most in a year in Taipei on improving metal demand while Aeon Thana jumped to a record in Bangkok after quarterly profit surged. Brazilian electric utility Eletropaulo Metropolitana SA was the biggest gainer on the developing nation index while OAO Transneft, Russia’s oil pipeline operator, advanced. The State Bank of India Ltd. rose as overseas investors added to their holdings of domestic shares for a 28th straight day.
The MSCI Emerging Markets Index (MXEF) added 0.1 percent to 1,046.65 in New York. Oil surged to a two-month high and the Standard & Poor’s GSCI gauge of 24 commodities rallied the most in a month as President Barack Obama returns to Washington to resume talks aimed at averting spending cuts and tax increases that threaten the world’s largest economy.
“Investors are hoping U.S. lawmakers will compromise and resolve the fiscal cliff before the deadline,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. (BDO) “For the meantime, stocks with solid growth stories will enjoy investors’ attention and outperform the market amidst this U.S. uncertainty.”
The MSCI’s emerging-markets gauge is set for a 14 percent gain this year, beating a 13 percent advance in the MSCI World Index, a measure of developed nations’ stocks. The 21 nations in the developing gauge send about 17 percent of their exports to the U.S. on average, World Trade Organization data show.
The BSE India Sensitive Index (SENSEX) rose 0.8 percent as overseas investors added to their holdings of domestic shares. Thailand’s SET Index (SET) climbed 0.3 percent to the highest since February 1996 after the nation’s exports exceeded forecasts. The Philippine Stock Exchange Index (PCOMP) gained 0.2 percent to a record. Hong Kong’s market was closed.
The Kazakhstan Stock Exchange Index (KZKAK) declined 1.6 percent. Russia’s Micex Index (INDEXCF) slipped less than 0.1 percent and Ukraine’s UX Index gained 0.4 percent. In the Middle East, Dubai’s DFM General Index (DFMGI) added 0.6 percent and Egypt’s EGX 30 Index (EGX30) fell 0.3 percent.
The 100-day volatility for the MSCI Emerging Markets Index fell to 10.76, the lowest since 2005. A gauge of material stocks in the index advanced 0.7 percent, pushing its multiple to 15 times estimated earnings, compared with 12 times for the broader index and 13.7 for MSCI World, data compiled by Bloomberg show.
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, added 0.3 percent to $43.31 while the Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, dropped jumped 5.7 percent to 21.71.
China Steel climbed 3.6 percent, the biggest advance since November 2011. Some Taiwanese steel plants will remain operating during the Chinese New Year as demand for the metal improves, the Commercial Times reported.
Eletropaulo jumped 7.2 percent in Sao Paulo as the utility announced a dividend payment, and Cia. Energetica de Minas Gerais SA declined 9.5 percent, the most in three months, as the deadline expired to receive a $769 million dividend from the Brazilian electric utility.
Airline Gol Linhas Aereas Inteligentes SA (GOLL4) rallied 16 percent after reporting that revenue generated per seat flown increased 17 percent in November from a year earlier.
Transneft gained 2.5 percent as Urals crude, the chief Russian blend, reached the highest in two months. OAO Rosneft, the country’s largest oil producer, advanced 1.3 percent.
Aeon Thana Sinsap jumped 3.7 percent to the highest close based on prices going back to December 2001. The Thai consumer loans unit of Japan’s biggest credit-card company said yesterday it swung a third-quarter profit versus a loss a year earlier.
Tradewinds (Malaysia) Bhd (TWI), a palm oil and rice producer, jumped 15 percent, the largest gain since June 2007. Perspective Lane (M) Sdn. and three other companies, which collectively own 45.1 percent of Tradewinds, jointly offered 9.30 ringgit a share for the rest of the company they don’t own.
State Bank of India gained 1.7 percent and Bharti Airtel Ltd. (BHARTI), India’s largest cell-phone operator, rose 2.9 percent. Overseas funds were net buyers of domestic stocks for a 27th day on Dec. 21, the longest stretch of net purchases since a record 41-day streak through Oct. 27, 2010, data compiled by Bloomberg show.
Poly Real Estate Group Co. (600048), China’s second-largest developer by market value, climbed 2 percent to the highest since November 2009 in Shanghai, amid speculation the government’s urbanization plan will support housing demand.
“Developers are gaining on the government’s call to use urbanization as a new engine for growth,” Gao Jian, an analyst at Northeast Securities Co. (000686), said by phone.
In Dubai, Shuaa Capital PSC (SHUAA), an investment bank controlled by the emirate’s ruler, surged 15 percent, the biggest rally since January 2009. Shuaa spokesman Oliver Schutzmann said the stock is undervalued and investors “see this as an opportunity to get in” as the company trims losses.
The yen weakened beyond 85 a dollar for the first time since April 2011 amid expectations Japan’s new government will push for more cash infusions to bolster the economy. Among emerging currencies, the Thai baht and Indonesian rupiah slid.
The extra yield investors demand to own emerging-market bonds over U.S. Treasuries gained two basis point, or 0.02 percentage point, to 268, according to JPMorgan Chase & Co.’s EMBI Global Index.
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