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Emerging-Market Stocks Advance a Third Day as Oil Shares Rally

Emerging-market stocks gained for a third day as higher oil prices boosted energy producers and reports in the U.S. spurred confidence in the global recovery. South Africa’s rand dropped to a four-year low versus the dollar after the economy slowed more than forecast.

OAO Gazprom, Russia’s biggest natural-gas producer, and Petroleo Brasileiro SA, Brazil’s state-run oil company, gained more than 0.7 percent. OTP Bank Nyrt., Hungary’s largest lender, climbed to the highest in almost two years after the central bank cut interest rates for a 10th month. OAO Magnit, Russia’s biggest food retailer, jumped to a record after MSCI Inc. increased its weighting in a benchmark gauge. The Colombian peso slid beyond 1,900 for the first time in 16 months

The MSCI Emerging Markets Index climbed 0.2 percent to 1,030.82. The gauge is down 0.8 percent this month following last week’s 1.8 percent slide. U.S. home prices rose in March by the most in seven years and confidence among American consumers climbed in May to the highest level in more than five years, data showed today.

“Markets are recovering from weakness last week,” Maarten-Jan Bakkum, an emerging-market strategist at ING Investment Management in The Hague, said by e-mail. “Positive drivers remain,” including expectations for monetary easing in emerging markets and a recovery in the global economy, he said.

The main indexes in Russia, Hungary, China, Mexico, Indonesia and Thailand rose more than 1 percent and Brazil’s Ibovespa lost 0.6 percent. Gauges of energy and health care companies in MSCI’s developing-nation index rose at least 0.6 percent, the most among 10 industry groups, while technology shares lost 0.6 percent, the biggest decline.

Emerging ETF

The iShares MSCI Emerging Markets Index exchange-traded fund rallied 0.6 percent to $42.50. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slumped 6.1 percent to 20.16.

Gazprom advanced 1.3 percent and Petrobras added 0.7 percent. Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s biggest gas distributor, rose 0.8 percent. Oil climbed 0.9 percent, rising for the first time in five days.

The Ibovespa dropped as Brookfield Incorporacoes SA slumped 5.3 percent, leading homebuilders’ losses on concern higher borrowing costs in Brazil will curb the economic recovery. Oil company OGX Petroleo & Gas Participacoes SA declined 5.1 percent, the most on the emerging markets gauge.

The Colombian peso fell to as low as 1,902.97, the weakest since Jan. 4, 2012. Colombia needs to do more to weaken peso to its “equilibrium rate” of about 1,950 and should continue its dollar purchases, Finance Minister Mauricio Cardenas said in a May 23 interview.

OTP added 3 percent. Hungary’s central bank cut the main interest rate to a record after the inflation rate plunged and as policy makers seek to boost lending and growth. The forint strengthened 0.7 percent against the euro.

The rand declined against all 31 major emerging and developed-market currencies tracked by Bloomberg, losing 1.8 percent to 9.7847 versus the dollar, the biggest slump since April 15 and the weakest level since March 2009 on a closing basis. Economic growth in Africa’s biggest economy slowed in the first quarter to an annualized 0.9 percent, less than the 1.6 percent median estimate of economists in a Bloomberg survey.

Fund Inflows

Magnit jumped 5.1 percent in Moscow and its global depositary receipts rallied 3.7 percent. The increased weighting may boost inflows into the GDRs from funds that track the MSCI gauge by $331 million, VTB Capital wrote in a report today.

The emerging-markets index has dropped 2.3 percent this year, compared with a 12 percent gain in the MSCI World Index. The developing-nation index trades at 10.9 times projected 12-month earnings, compared with the MSCI World’s 14.6 times, data compiled by Bloomberg show.

The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong jumped 1.6 percent, the most in a month. The Jakarta Composite Index surged 1.8 percent, the biggest increase since Sept. 14. Taiwan’s Taiex Index lost 0.2 percent.

Chinese Premier Li Keqiang said yesterday his country is confronted by “huge challenges” as it opens up the economy and reforms will be accompanied by tapered-off levels of growth.

China Gas

China Gas Holdings Ltd. (384) jumped 6.1 percent after saying it expects a “significant” increase in full-year net income, citing better-than-expected operating performance.

China Taiping Insurance Holdings (966) Co., the first overseas-listed Chinese insurer, jumped 15 percent in Hong Kong, the biggest gain since October 2008, after saying it would buy 10.6 billion yuan ($1.7 billion) of assets from its parent.

PT Astra International (ASII), Indonesia’s biggest automotive retailer, rallied 6.4 percent in Jakarta, on speculation the government will introduce measures to encourage purchases of alternative-energy vehicles.

SapuraKencana Petroleum Bhd. (SAKP), Malaysia’s biggest oil and gas services company, jumped 5.1 percent to a record in Kuala Lumpur after saying its unit won a contract.

Taiwan Semiconductor Manufacturing Co. (2330) declined 2.2 percent, leading exporters lower as the yen weakened, hurting their competitiveness against Japanese rivals.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose five basis points, or 0.05 percentage point, to 287 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net; Lyubov Pronina in London at lpronina@bloomberg.net

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

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