Emerging stocks rose to an eight-week high, almost erasing this year’s drop, as foreign inflows boosted Indian shares and homebuilders paced gains in Brazil.
ICICI Bank Ltd. (ICICIBC) advanced the most in two weeks as overseas mutual funds extended this year’s record purchases of Indian equities. Malaysian shares extended yesterday’s gains after Prime Minister Najib Razak’s electoral victory. OAO Sberbank, Russia’s largest lender, surged to the highest price in almost two months, while builder Gafisa SA helped send Brazil’s Ibovespa (IBOV) to a six-week high. The yuan gained the most this year.
The MSCI Emerging Markets Index advanced 0.6 percent to 1,052.48, the highest level since March 12. The gauge trimmed this year’s decline to 0.3 percent after data showed German factory orders unexpectedly jumped for a second month in March, suggesting Europe’s largest economy is starting to grow again.
“Today’s news from Germany could help stem the tide, if not reverse the trend, of falling growth expectations,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.5 billion in assets, said by phone. “That could have an impact on sentiment in the markets.”
Gauges of financial and energy companies on the emerging- market index rose at least 1 percent, the most among 10 groups. The broader measure trades at 11 times 12-month projected profit, compared with the MSCI World’s valuation of 14.5, data compiled by Bloomberg show.
The iShares MSCI Emerging Markets exchange-traded fund rose 0.7 percent to an eight-week high of $43.89. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, dropped 1.3 percent to 17.77.
The Ibovespa added 1.5 percent on speculation that Brazilian policy makers will limit interest-rate increases this year. Gafisa jumped 4.1 percent. Banco do Brasil SA rose the most among financial stocks as concern eased that government pressure on banks to reduce loan rates will curb earnings.
Mexico’s IPC index rose 0.5 percent. Grupo Financiero Santander Mexico SAB, a unit of Spain’s biggest bank, jumped the most in seven months after the local stock exchange said it will be added to its benchmark equity index.
Russia’s Micex Index rose 1.2 percent to the highest level since April 2. OAO Sberbank and VTB Group, the nation’s two biggest lenders, climbed at least 2.4 percent.
Benchmark gauges in Hungary, Czech Republic and Poland gained, while Turkey’s Borsa Istanbul Stock Exchange National 100 Index snapped a 10-day rally. Immofinanz AG (IIA), based in Vienna, added 0.6 percent in its first day of trading on the Warsaw Stock Exchange, becoming the biggest property developer listed on central Europe’s fastest-growing equity market.
India’s S&P BSE Sensex rose 1.1 percent to the highest level since Jan. 31. ICICI, India’s largest private lender, rallied 1.9 percent, the most since April 22.
The FTSE Bursa Malaysia KLCI Index rallied 1.4 percent to a record. Thailand’s SET Index added 1.4 percent, while the Hang Seng China Enterprises Index (HSCEI) gained 1 percent. Data tomorrow may show that Chinese exports grew at the slowest pace in five months in April. China Shipping Container Lines Co., the country’s second-biggest shipping company, surged 11 percent, posting the biggest gain in the MSCI Emerging Markets Index and the iShares ETF.
The yuan strengthened 0.2 percent as Premier Li Keqiang pledged to come up with a plan that would allow investment capital to move more freely in and out of China.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped two basis points, or 0.02 percentage point, to 268 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.