Emerging-market equities rallied a third month in the longest stretch of gains since 2010 as China’s rebounding economy and signs of an improving global outlook bolstered financial and industrial stocks.
Developing-nation financial shares led gains on the MSCI Emerging Markets Index in January, as property developer China Vanke Co. surged 35 percent. Brazil’s Centrais Eletricas Brasileiras SA (ELET6) drove an index of emerging utility stocks 2.7 percent higher. Russia’s benchmark gauge climbed for a second month, while Romania’s leu strengthened the most among developing-nation currencies. The Shanghai Composite Index entered a bull market on signs China’s economy is rebounding.
The MSCI gauge climbed 1.3 percent in January, capping the most consecutive monthly gains since April 2010. The measure rose 0.1 percent to 1,069.01 in New York as 396 stocks fell and 386 shares advanced. China’s economy ended its seven-quarter slowdown in the last three months of 2012, data this month showed, while a report today indicated consumer spending in the U.S. climbed in December on higher incomes.
“Across the board you’ve had a pretty good run in emerging markets,” Ed Kuczma, an emerging-markets analyst at Van Eck Associates Corp., said by phone in New York. “We continue to heavily favor names related to the consumer because with increasing incomes we get strong growth in a low-growth world.”
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, rose 0.2 percent to $44.22 in New York, while the gauge lost 0.3 percent in the month. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, advanced 3 percent to 19.24.
Brazil’s Bovespa (IBOV) rose 0.7, paring a monthly drop of 2 percent. Vale SA (VALE3), the world’s largest iron-ore producer, rose 3.8 percent, the most four weeks, after Bank of America corp. recommended investors buy the stock. Centrais Eletricas Brasileiras, known as Eletrobras, rose 3.6 percent today to boost its gain for the month to 21 percent.
Argentina’s Merval (MERVAL) Index soared 21 percent in January, the most among global equity indexes. The benchmark was boosted by a 75 percent surge by country’s largest power distributor, Empresa Distribuidora y Comercializadora Norte SA.
The Mexican IPC (MEXBOL) index declined 1 percent in the biggest daily slump since Nov. 7, paring its monthly gain to 3.6 percent. Grupo Modelo SAB, Mexico’s largest brewer, was the second-biggest decliner on the MSCI EM Latin America Index (MXLA) with a 6.8 percent drop. The U.S. sued to block Anheuser-Busch InBev NV’s proposed $20.1 billion purchase of the half of Modelo it doesn’t already own, saying the deal would hurt competition and raise prices.
The ISE National 100 Index (XU100) reversed earlier gains to slip 0.3 percent in Istanbul, trimming the monthly advance to 0.7 percent. The lira climbed 0.5 percent against the dollar, the most since Jan. 17. The Turkish currency has appreciated 1.4 percent this month, the biggest jump since June.
The Romanian leu advanced 4.4 percent against the dollar for the month, the most among emerging market currencies, followed by the Indian rupee. The South African rand tumbled 5.4 percent as the worst performing emerging market currency.
In Asia, the Hang Seng China Enterprises Index declined 0.3 percent. The Shanghai Composite Index climbed 0.1 percent to the highest close since May 29. Vietnam’s VN Index (VNINDEX) slid 1.6 percent after reaching an eight-month high yesterday.
South Korea’s won declined 0.3 percent versus the dollar after Deputy Finance Minister Choi Jong Ku proposed taxing trading in currency and bonds to limit “speculative” capital inflows.
The MSCI Emerging Markets/Financials Index led monthly gains among industry groups in the MSCI Emerging Markets Index with a 4.3 percent advance, followed by a 2.7 percent jump by utilities companies. This month’s 1.3 percent gain in the developing-nations measure trailed a 5 percent increase in the MSCI World Index. (MXWO) The emerging-markets index trades at 11 times estimated 12-month profit, compared with the MSCI World’s 13.6 times, data compiled by Bloomberg show.
China Vanke, the country’s biggest developer by market value, added 1 percent to a record, boosting its monthly gain to 35 percent.
OAO Sberbank jumped 1.5 percent to the highest price in two years in Moscow, contributing to an 18 percent monthly advance. Russia’s biggest lender said its depositary receipts program is close to the limit, according to a website statement. The receipts can only account for 25 percent of a company’s shares and 50 percent of its listed shares, according to Russian regulations. Sberbank’s depositary receipts are equivalent to four ordinary shares.
African Bank Investments Ltd. (ABL), South Africa’s largest provider of unsecured loans, lost 3 percent in its biggest slump in two weeks. Lending slowed for the first time since a 2009 recession, as the bank tightened standards amid rising consumer debt, African Bank said in a statement yesterday.
Bumi Resources Tbk PT (BUMI), an Indonesian coal producer, surged 9.7 percent, the most since Sept. 14, to lead daily gains among emerging-market stocks.
Datang International Power Generation Co. (991) climbed 6.9 percent in Hong Kong to the highest close since October 2010. Full-year net income in 2012 probably rose as much as 115 percent, the company said, citing preliminary calculations. The stock was the second-biggest gainer in the developing-nations gauge.
San Miguel Corp. (SMC) jumped 5.8 percent in Manila after a six- day trading halt requested by the company to allow shareholders to evaluate an offer to repurchase $600 million in bonds. Globe Telecom Inc. led declines on the emerging-market gauge, sinking 7.4 percent in Manila.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose four basis points, or 0.04 percentage point, to 268 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.