Emerging-market stocks advanced for the first time in three days as Egyptian and Hungarian shares surged. South Africa’s rand paced gains in currencies.
The MSCI Emerging Markets Index rose 0.7 percent to 912.71, after slumping 1.8 percent in two days. Egypt’s EGX 30 Index led gains among 94 world gauges as the interim president set a timeline for new elections. Mol Nyrt., Hungary’s largest refiner, drove the nation’s benchmark stock measure to a three-week high. An index of 20 developing-nation currencies tracked by Bloomberg advanced for a second day as the rand jumped after an illegal strike at a South African platinum company ended, while South Korea’s won climbed the most in five months.
Stocks rebounded from a two-day slump which took the benchmark of developing nations to the lowest level since June 26 amid concern about an economic slowdown and political turmoil. The United Arab Emirates, which took an hour to welcome the military-backed ouster of Islamists in Egypt, has pledged $3 billion in aid to the Arab world’s most populous nation. Investors also awaited the release of the U.S. Federal Reserve’s minutes tomorrow for signals on its stimulus plan.
“The major panic regarding the emerging-market asset class success story seems to be over for the time being,” Michael Ganske, head of emerging-markets at Rogge Global Partners Plc in London, said by e-mail. “I expect more volatility going forward, data flow and policy comment driven.”
Equities rose even after the International Monetary Fund said the world economic growth will struggle to accelerate this year as a U.S. expansion weakens, China’s economy levels off and Europe’s recession deepens. Global growth will be 3.1 percent this year, unchanged from the 2012 rate, and less than the 3.3 percent forecast in April, the IMF said today, trimming its prediction for this year a fifth consecutive time.
The iShares MSCI Emerging Markets Index exchange-traded fund rose 1.3 percent to $37.88. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slipped 11 percent to 25.69.
All 10 groups in the MSCI Emerging Markets Index gained today as health-care and consumer discretionary shares had the biggest advances. The broad measure has slumped 14 percent this year, compared with a 9.7 percent jump in the MSCI World Index. The developing-nation gauge trades at 9.6 times projected earnings, lower than the MSCI World’s valuation of 13.5.
Developing markets are “absolutely oversold,” said Peter Kohli, chief executive officer of DMS Funds in Leesport, Pennsylvania. He spoke in an interview in New York. “Emerging markets should be viewed as long term investments” and they’ll do well, he said.
Russian equities fell as OAO Pharmstandard sank after the country’s biggest pharmaceutical company offered to buy out investors at a discount. The Budapest Stock Exchange Index rose a fourth day as Mol added 2.1 percent. Turkish shares gained, while benchmark gauges in Poland and the Czech Republic slid.
South Africa’s currency advanced 1.4 percent as Anglo American Platinum Ltd., the world’s biggest producer of the metal, said miners at two of its operations returned to work today. The won jumped on speculation South Korean exporters took advantage of a two-day decline in the currency to repatriate income from overseas.
Egypt’s stocks rebounded from the biggest drop in almost a month, while benchmark bonds fell for a second day and default risk jumped after fatal clashes in Cairo. Commercial International Bank Egypt SAE, the nation’s biggest publicly traded lender, led the gains, jumping 4.4 percent on volume of 1.2 times the three-month daily average.
Indian stocks advanced as the rupee rebounded after regulators took steps to curb speculation in the derivatives market. Sun Pharmaceutical Industries Ltd., the nation’s largest drugmaker by market value, rallied to a record. State Bank of India rose for the first time in three days, leading lenders higher. The rupee strengthened as much as 1.5 percent.
The Shanghai Composite Index rose after China Petroleum and Chemical Corp. jumped the most in 11 months and cement and utility companies rallied, overshadowing a report showing faster inflation.
The premium investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 334 basis points, according to JPMorgan Chase & Co.