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Emerging-Market Stocks Advance as Export Companies Gain

Emerging-market stocks posted the biggest increase in a week as a stronger Japanese currency boosted exporters. Lenders declined in Turkey after the central bank capped rates on overdraft accounts.

Taiwan Semiconductor Manufacturing Co. (2330) and Hyundai Motor Co. drove advances among Asian exporters as an appreciating yen eased concern about a loss of competitiveness. MMX Mineracao & Metalicos SA, a mining company, gained in Brazil, while Turkiye Garanti (GARAN) Bankasi AS declined in Istanbul. OAO Lukoil, Russia’s second-biggest oil producer, fell a third day as crude dropped on speculation China may accept slower growth. The rand weakened before a report that will probably show South Africa’s economy slowed in the first quarter.

The MSCI Emerging Markets Index climbed 0.2 percent to 1,028.53. The measure tumbled 1.8 percent last week, the biggest slide since the first week of April. The yen strengthened against most of its major peers amid concern the Bank of Japan is struggling to control the nation’s bond yields through monetary stimulus. China won’t sacrifice its environment to ensure short-term economic growth, President Xi Jinping said on May 24.

“Doubts on whether the Japanese authorities can sustain the weak yen is benefiting the region’s exporters,” Fadlul Imansyah, fund manager at PT CIMB-Principal Asset Management, said by phone in Jakarta. “Some investors are taking their money off the table on concerns of the global growth outlook.”

Trading Volumes

Benchmark gauges in Taiwan, Poland and India rose at least 0.9 percent. The Borsa Istanbul National 100 Index (XU100) decreased for a third day, slipping 0.5 percent, and Russia’s Micex Index (INDEXCF) dropped 0.2 percent. Brazil’s Ibovespa was little changed while Mexico’s IPC Index fell 0.9 percent.

Trading volumes for the Micex were one-third of the 30-day average, and at least 16 percent less than average for gauges in Brazil, India and Taiwan, according to data compiled by Bloomberg. Volumes on Mexican stocks were 74 percent below the 30-day average as markets in the U.S. and U.K. were closed for public holidays.

The rand depreciated 0.4 percent versus the dollar, the third-biggest decline among 25 emerging-market currencies tracked by Bloomberg. Growth in Africa’s biggest economy probably slowed in the first quarter, a report may show tomorrow, according to the median estimate of 13 economists in a Bloomberg survey.

Meatpacker Marfrig Alimentos SA climbed 3.4 percent in Sao Paulo, rising a second day, while MMX gained 2.3 percent. OHL Mexico SAB tumbled 6.9 percent, the most in two months, after Excelsior columnist Dario Celis reported the company is planning a share sale.

Garanti, Akbank

Garanti slipped 2.7 percent and Akbank TAS slid 1.9 percent in Istanbul. The lenders account for about 22 percent of the weighting on the Borsa Istanbul Stock Exchange National 100 Index, which fell 0.5 percent.

The rate-cap on overdraft accounts takes effect today, the central bank said in a statement on its website May 25. The cap may cut full-year net income at seven of Turkey’s largest banks, including Garanti, by about 1 billion liras ($542 million) in total, Ak Investment said in an e-mailed report today.

Lukoil slid 0.9 percent in Moscow as oil retreated 0.5 percent in electronic trading on the New York Mercantile Exchange.

China Deal

Rafako SA, a Polish power engineering company, surged 24 percent, the most since June 2011, after signing an agreement to work with North China Power on a project to build a coal-fired power plant in Jaworzno, Poland.

CEZ AS, the biggest Czech utility, rose 1.2 percent in Prague, the biggest increase this month, after Hospodarske reported some Czech cabinet members and industry managers doubt the viability of a $10 billion plan to build new nuclear reactors at the Temelin power station, citing Foreign Minister Karel Schwarzenberg and others.

Postponing the project, which wouldn’t be “economically profitable,” would be positive for the company’s long-term dividend outlook, Petr Bartek, an analyst at Erste Group AG in Prague, said in an e-mailed note.

Six out of 10 industry industry groups rose today, led by a gauge of technology companies, which climbed 1.1 percent. The emerging-markets index has declined 2.5 percent this year, compared with an 11 percent gain in the MSCI World Index.

Taiwan Semiconductor, the world’s largest contract maker of chips, gained 2.3 percent, the most since April 19.

Hyundai Motor, South Korea’s biggest automaker, added 1.5 percent, and LG Electronics Inc. (066570), the world’s second-largest television maker, climbed 3.1 percent.

Yen Debt

PT Perusahaan Gas Negara fell 4.9 percent in Jakarta, the biggest drop in 11 months. The stronger yen may boost the cost to serve its debt denominated in Japan’s currency, John Teja, director at Ciptadana Securities, said today.

The Shanghai Composite Index added 0.2 percent as environment-protection companies Sound Environmental Resources Co. and Beijing SPC Environment Protection Tech Co. jumped at least 4.9 percent after President Xi signaled a tolerance for slower expansion to avoid environmental degradation.

The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong rose for the first time in five days, advancing 0.3 percent.

The Philippine Stock Exchange Index (PCOMP) tumbled 2.4 percent, the most since June 4, after the BusinessWorld newspaper said the nation’s economic growth may have slowed in the first three months of this year.

Vietnam’s benchmark VN Index (VNINDEX) jumped 2.4 percent to the highest level since February 2011 after the government said the economy improved and foreign direct investment increased.

To contact the reporters on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net; Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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