Emerging-market stocks climbed the most in two months, paring its February decline, as China Vanke Co.’s (000002) better-than-estimated earnings boosted Chinese developers and Magyar Telekom Nyrt. (MTELEKOM)’s dividend lifted Hungarian shares.
Vanke, China’s biggest developer, surged the most in five weeks in Shenzhen after saying net income rose last year. Vale SA (VALE3) advanced as Goldman Sachs Group Inc. said the miner showed signs of a turnaround. Magyar Telekom, the Hungarian unit of Deutsche Telekom AG, had its biggest gain since June. FirstRand Ltd. (FSR) rose as Citigroup Inc. recommended shares of the South African lender. Indian stocks erased gains and the rupee fell after the government signaled record borrowing plans.
The MSCI Emerging Markets Index added 0.8 percent to 1,054.62 in New York, trimming February’s drop to 1.3 percent, its worst month since May. Vanke advanced 6 percent as net income surged 30 percent last year. A report today showed the U.S. economy expanded in the fourth quarter after data yesterday indicated orders for durable goods rose in January. Demand increased yesterday at Italy’s first debt auction since inconclusive election results earlier this week.
“China is demonstrating a clear path of economic recovery, especially in the property sector,” Jessada Sookdhis, chief investment officer at CIMB-Principal Asset Management Co. Ltd., which oversees about $805 million of assets, said by phone in Bangkok. “The U.S. data and Italian debt sales have also bolstered sentiment in emerging markets.”
Italian bond yields declined for a second day amid speculation the nation’s lawmakers will set aside differences to form a broad coalition government. The U.S. economy grew at a 0.1 percent annual rate in the last quarter, up from a previously estimated 0.1 percent drop.
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, dropped 0.5 percent to $43.21. U.S. stocks erased gains in the final minutes of trading as the Senate voted to keep $85 billion of spending cuts in place. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, fell 2 percent to 18.42.
The Shanghai Composite Index advanced 2.3 percent. South Korea’s Kospi (KOSPI) added 1.1 percent and the won climbed 0.2 percent against the dollar. Mexico’s IPC Index rose 0.8 percent in its second day of gains.
Brazil’s Bovespa gained 0.3 percent as Vale climbed 3.1 percent. The world’s biggest iron-ore producer said it’s poised to benefit from a price recovery and a balance-sheet cleanup that spurred a record quarterly loss.
Voting shares of retailer Lojas Americanas SA jumped 7.8 percent in Sao Paulo, leading gains by companies that sell on credit amid speculation that Brazilian policy makers will delay raising record low interest rates.
Argentina’s credit-default swaps surged and bonds fell the most in emerging markets after the country said it would halt payments on its restructured bonds if it was ordered to pay defaulted debt holders.
Hungary’s BUX Index (DFMGI) climbed 1.6 percent and South Africa’s FTSE/JSE Africa All-Share Index added 1.1 percent. The Czech PX Index gained 1.9 percent, while Turkey’s benchmark stock index added 1.5 percent.
Magyar Telekom gained 4.4 percent in Budapest, the biggest jump since June 29. Management proposed holding the dividend at 50 forint per share after the company posted its first increase in sales since 2007 last year.
FirstRand surged 3.1 percent, the most since Dec. 20, in Johannesburg. Citigroup raised its recommendation on the stock to buy from neutral. The rand weakened for the first time in six days after South Africa posted a record trade gap in January.
Russia’s Micex Index (INDEXCF) slipped 0.1 percent. OAO GMK Norilsk Nickel, Russia’s largest nickel producer, sank 1.7 percent to the lowest level since Dec. 14 as industrial metals declined. OAO Rosneft, the nation’s biggest oil company, fell 1.2 percent in Moscow as crude in New York extended the first monthly drop since October.
Mail.ru, the Moscow-based Russian-language e-mail and social networking company, fell 10 percent in London, the most since Aug. 15, as billionaire Alisher Usmanov’s USM Holdings Ltd. reduced its stake by about 7.4 percent. Trading volume on the shares was 74 times the three-month average, according to data compiled by Bloomberg.
Inter RAO Lietuva AB (IRL) rose 6.9 percent to the highest since it started trading in Warsaw in December after the Baltic power trader reported 2012 earnings.
The Dubai Financial Market General Index fell 0.6 percent. Arabtec Holding Co. (ARTC) slumped 9.8 percent, the steepest decline since March, on concern the Dubai builder’s capital increase plans may dilute the shares given the conversion price and as full-year profit missed estimates.
Depa Ltd. soared 11 percent, the most since Nov. 21, after EFG-Hermes Holding SAE said the Dubai-based interior designer may be taken over by Arabtec Holding.
India’s S&P BSE Sensex declined 1.5 percent to the lowest close since Nov. 27. Finance Minister Palaniappan Chidambaram said the nation’s fiscal deficit will be 4.8 percent of gross domestic product in the year through March 2014 and announced record borrowing plans.
Reliance Communications Ltd., an Indian phone operator, plunged 12 percent, the most since February 2011.
Nine out of 10 industry groups in the MSCI Emerging Markets Index (MXEF) advanced, with gauges of financial and industrial companies adding at least 1.2 percent, leading gains. The emerging-markets index has lost 0.1 percent this year, compared with a 5 percent gain in the MSCI World Index. The developing- nations index trades at 10.5 times projected 12-month earnings, compared with the MSCI World’s 13.8 times, data compiled by Bloomberg show.
The extra yield investors demand to hold emerging-market debt over U.S. Treasuries rose one basis point, or 0.01 percentage point, to 288, according to the JPMorgan Chase & Co.’s EMBI Global Index.
Federal Reserve Chairman Ben S. Bernanke said yesterday recent increases in some interest rates may signal the economy is gaining vigor and that the central bank’s easing policies are helping to improve demand for homes and cars.
“The view is that quantitative easing can last longer than expected in the U.S., after some fears that it could be reduced later this year,” said Martial Godet, head of emerging-markets strategy at BNP Paribas SA in London. “China is rebounding after a significant underperformance, while Indian (SENSEX) banks are collapsing on a disappointing budget.”
The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong rose 2.6 percent, the most since Jan. 2. The Jakarta Composite Index advanced 1.7 percent to a record. Vietnam’s VN Index (VNINDEX) surged 1.9 percent, the most since Feb. 6. The Philippines Stock Exchange Index increased 1.6 percent to a record, led by BDO Unibank Inc. (BDO), which surged 8 percent.
China’s yuan advanced to a four-week high as the central bank set the currency’s fixing at the strongest level in a month before a report that is forecast to show manufacturing growth accelerated.
Vanke’s net income climbed to 12.55 billion yuan ($2 billion) in the 12 months to Dec. 31 from 9.62 billion yuan a year earlier, the company said in a statement yesterday. That compares with the 11.95 billion yuan average profit estimate of 16 analysts surveyed by Bloomberg.
Biggest rival Poly Real Estate Group Co. (600048) rose 3.6 percent in Shanghai. Sino Land Co. added 3.4 percent in Hong Kong.
South Korean manufacturers’ confidence for March climbed to the highest level since July, the Bank of Korea said. OCI Co. (010060), which produces polysilicon used in solar panels, climbed 2.7 percent in Seoul.
BYD Co. (1211), the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., slid 4.2 percent in Hong Kong, the lowest level since Feb. 6, after reporting full-year profit that trailed analysts’ estimates.
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