Emerging Stocks Rise to 8-Month High on China Policy, U.S. Talks

Emerging-market stocks rose for a fifth day on speculation China will take steps to boost domestic consumption, while U.S. lawmakers arranged meetings to avert budget cuts threatening growth in the world’s largest economy.

Citic Securities Co. (6030) and Haitong Securities Co. led Chinese brokerages higher after the country’s regulator said it will ease bond financing for securities firms. Vanguarda Agro SA jumped the most in 10 days to lead gains in Sao Paulo. OMV Petrol Ofisi AS (PTOFS), Turkey’s biggest fuel retailer, rose the most in three months after receiving approval to sell a unit.

The MSCI Emerging Markets Index (MXEF) added 0.5 percent to 1,055.18 in New York, the highest close since April 3 and extending a sixth weekly gain to 1.2 percent. China may introduce measures to boost consumption in areas such as autos, household electronics and solar, the China Securities Journal said. President Barack Obama met with U.S. lawmakers today and is seeking an interim plan to avert more than $600 billion in tax and spending changes in 2013, just three days before a year- end deadline, according to an official familiar with the talks.

“Investors believe differences over the U.S. budget issues will be resolved soon,” Kim Dae Young, a Seoul-based fund manager at KB Asset Management Co., which manages about $28 billion in assets, said by phone. “Policies from China’s new leadership are likely to match investors’ expectations.”

The developing-nations gauge has risen 15 percent this year, beating the 12 percent increase in the MSCI World Index (MXWO) of developed countries. The emerging-markets gauge trades at 12.1 times estimated profit, compared with the MSCI World’s 13.7, according to data compiled by Bloomberg.

Brazil, Russia

Brazil’s Bovespa (IBOV) Index gained 0.9 percent, the first advance in four sessions. Shares of Vanguarda, a Brazilian exporter of soybeans, corn and other crops, jumped 5.1 percent, the most since Dec. 18.

Banco do Brasil SA, Latin America’s biggest lender by assets, jumped to the highest price in three months after Brazil’s central bank cut reserve requirements for lenders to spur investments in Latin America’s largest economy.

Benchmark indexes in Hungary and Romania rose. Russia’s 50- stock Micex Index (VTBMICX) fell 0.2 percent as Urals crude, Russia’s main export blend, declined. OAO Mostotrest, a bridge and road builder dropped 7.8 percent, snapping a four-day advance. OAO Aeroflot, Russia’s biggest airline, rose 2.6 percent to the highest price in three months.

The Istanbul Stock Exchange National 100 Index (XU100) rose to a record for a fourth day. OMV Petrol jumped 5.1 percent, the most since Sept. 7, after the anti-trust board gave approval to sell its 100 percent stake in Petrol Ofisi Arama Uretim Sanayi & Ticaret AS to Tiway Oil BV.

Asian Markets

The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, added 0.4 percent to $43.70, the highest price in a week. The ETF has risen 15 percent this year. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, jumped 8.4 percent to 23.04.

The South Korean won gained 0.2 percent to the strongest level since September 2011, completing a sixth weekly gain as signs of a pickup in the economy attracted funds from abroad and exporters repatriated income. India’s rupee climbed 0.3 percent, while the Russian ruble dropped 0.5 percent, the first decline in three days.

The Shanghai Composite Index (SHCOMP) rallied 1.2 percent to the highest since June 21, paring the worst annual performance among major Asian markets this year. The BSE India Sensitive Index climbed 0.6 percent to the highest level in a week. Stock markets in South Korea, Taiwan, Indonesia, Thailand, the Philippines and Vietnam will be closed on New Year’s Eve.

Brokerage Bonds

China Everbright Ltd. (165) soared 12 percent in Hong Kong, the biggest advance since October 2011, making it the best performer on the MSCI Emerging Markets index. The China State Council approved the reorganization of the company, Shanghai Securities News reported yesterday.

Citic Securities surged 11 percent in Hong Kong, while Haitong Securities climbed 6.9 percent. The Chinese government will allow brokerages to issue and trade subordinated bonds on approved exchanges, according to a statement posted on the China Securities Regulatory Commission’s website.

SAIC Motor Corp. (600104), the biggest Chinese automaker, jumped to the highest level since July, and BYD Co. Ltd. (1211), the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., rose 4.1 percent, climbing for a seventh day.

Hyundai Motor

Hyundai Motor Co. (005380), South Korea’s biggest carmaker, slipped 2 percent to the lowest since Nov. 26 on concern a stronger won may cut the value of overseas earnings. Hyundai Mobis (012330) Co., South Korea’s biggest auto-parts maker, lost 1.9 percent.

“Investors’ concern about the 2013 outlook for automakers and the strengthening won may be affecting share prices today,” Lee Hyung Sil, an analyst at Shinyoung Securities Co., said by phone.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 271, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net; Lyubov Pronina in London at lpronina@bloomberg.net

To contact the editor responsible for this story: Allen Wan at awan3@bloomberg.net

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