Emerging-market stocks rose for the first time in three days as Egyptian shares soared after the army deposed President Mohamed Mursi and Brazilian equities rebounded from the worst monthly selloff in four years.
Egyptian Financial & Industrial Co. and Commercial International Bank Egypt SAE led the EGX 30 Index 7.3 percent higher, its biggest jump since June 2012. The Ibovespa climbed as companies controlled by billionaire Eike Batista surged and iron-ore producer Vale SA gained for the first time in three days. Batista’s flagship company OGX Petroleo & Gas Participacoes rose 21 percent, while MPX Energia SA soared 10 percent. Brazil’s real rose after the central bank intervened.
The MSCI Emerging Markets Index added 1.1 percent to 922.10. The European Central Bank left its interest rate unchanged today and President Mario Draghi made an unprecedented pledge to keep rates low for an extended period. Yields on Egypt’s $1 billion of 5.75 percent bonds due in April 2020 fell 148 basis points, or 1.48 percentage points, the most since the notes were sold in 2010, to 9.29 percent. U.S. markets are shut today for the Independence Day holiday.
“Despite how much potential there was for big problems to emerge out of Egypt, so far so good,” Christopher Palmer, who oversees about $2.5 billion as the London-based director of global emerging markets at Henderson Global Investors Ltd., said by phone. “There’s been a number of things pressuring markets that maybe just eased off a bit. The ECB’s comments played a role in this.”
The ECB officials left the main refinancing rate at 0.5 percent at a meeting in Frankfurt after reducing it by a quarter point in May. The decision was predicted by 61 of 62 economists in a Bloomberg News survey. The benchmark will remain at the current or lower level for an “extended period of time,” Draghi said.
The 21 countries in the developing-nations gauge send about 17 percent of their exports to the U.S. and 26 percent to the European Union on average, data compiled by the World Trade Organization show. Nine of 10 industry groups in MSCI’s developing-nation index increased today, led by gauges of telecommunications services and energy and materials companies.
Egyptian Financial and Commercial International Bank Egypt jumped 10 percent in Cairo, the biggest gain for both since 2008. Adly Mansour, the chief justice of the constitutional court, was sworn in as interim president today after the army ousted Mursi late yesterday and called early elections as part of a plan agreed on with politicians and religious leaders.
The Ibovespa added 1.6 percent. Energy company MPX jumped in Sao Paulo as founder Batista quit as chairman after Germany’s E.ON SE strengthened its control, agreeing to invest 400 million reais ($176 million) in the utility and appointing an interim head of the board. OGX surged after a 58 percent tumble in the previous five days, while Vale added 3.7 percent.
South Africa’s FTSE/JSE Africa All Share Index rose 1.8 percent, its first gain in three days. Benchmark indexes in Hungary, Poland and the Czech Republic climbed at least 0.7 percent. Mexico’s IPC Index gained 0.9 percent.
Gedeon Richter Nyrt., Hungary’s biggest drugmaker, added 2.8 percent, the most since May 24, on speculation a planned 10-1 split in the stock’s face value this month will see the company returned to MSCI Inc.’s index for the country.
Russia’s Micex index advanced 1.2 percent. OAO Rostelecom, Russia’s largest fixed-line operator, added 5.2 percent in Moscow, rising for a fifth day, its longest winning streak since Jan. 9. The company is in talks to sell part of its treasury shares to the Kremlin-backed Russian Direct Investment Fund, spokeswoman Kira Kiryukhina said on July 2.
The MSCI gauge has declined 13 percent this year, compared with an 8.2 percent increase in the MSCI World Index of developed-nation shares. The emerging-market index is valued at 9.6 times 12-month estimated earnings, compared with a multiple of 13.3 for the MSCI World, according to data compiled by Bloomberg.
The real rose 0.9 percent after the Brazilian central bank intervened in the foreign-exchange market to stem a three-month rout. South Africa’s rand and the South Korean won strengthened 0.5 percent versus the dollar.
The Hang Seng China Enterprises Index (HSCEI) of mainland companies traded in Hong Kong rose 1.4 percent, led by gains in Zijin Mining Group Co., which surged 11 percent. South Korea’s Kospi Index climbed 0.8 percent, while India’s S&P BSE Sensex added 1.2 percent, ending a two-day retreat.
Trading volumes in Taiwan, Malaysia and Indonesia were at least 20 percent less than their respective 30-day averages, data compiled by Bloomberg show. The Micex traded 46 percent below its average.
The Shanghai Composite Index (SHCOMP) climbed 0.6 percent as commodity producers, consumer discretionary companies and property developers rallied. Chinese Premier Li Keqiang said money should also be allocated to transform the structure of the economy to focus more on domestic consumption, according to the State Council in a statement on its website yesterday.
Hyundai Merchant Marine Co., the biggest shareholder in Hyundai Asan Corp., which manages a resort in communist North Korea, jumped 15 percent, the most in more than two weeks in Seoul. The two Koreas officially restored a hotline at the border village of Panmunjom today. North Korea said yesterday it will allow South Korean businessmen back into the jointly-run Gaeseong industrial complex, which has been shut since the North withdrew its workers in April.
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