Emerging-market stocks rose for a second day on speculation China will act to stimulate the economy after a decline in exports. Turkey’s default swaps jumped the most in two weeks after Fitch Ratings said social unrest could put the nation’s investment-grade status at risk.
The MSCI Emerging Markets Index rose 0.3 percent to 915.63, extending a two-day advance to 1.1 percent. The Shanghai Composite Index (SHCOMP) surged the most in three months as Yanzhou China Coal Energy Co. soared 10 percent, while Brazil’s Ibovespa (IBOV) increased for the first time in three days as commodity producers rallied. Turkey’s currency tumbled and the cost to protect against default on debt climbed the most since June 24.
Chinese stocks drove gains in developing-nation shares as an unexpected drop in exports bolstered bets the government will stimulate the economy. Equities briefly extended gains as minutes from the Federal Reserve’s last meeting showed many officials want to see further progress in the employment market before the central bank slows the pace of bond purchases.
“We’ve reached a point where bad news is good news, because it’s so bad they’re going to have to do something about it,” said Patrick Chovanec, the New York-based chief strategist at Silvercrest Asset Management Group LLC, referring to Chinese data. His firm manages $14 billion in assets. “People are comfortable with the status quo, which is the Fed being extremely supportive. This is the world that people know.”
The iShares MSCI Emerging Markets Index exchange-traded fund slid 1 percent to $37.52. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, added 5.1 percent to 27.
Eight of 10 groups in the MSCI Emerging Markets Index gained today as utility and technology shares had the biggest advances. The broad measure has slumped 13 percent this year, compared with a 10 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 13.6.
Brazil’s Ibovespa added 0.9 percent as Usinas Siderurgicas de Minas Gerais SA advanced after JPMorgan Chase & Co. raised its recommendation on the steelmaker to the equivalent of hold. Cia. Paranaense de Energia, the electricity distributor known as Copel, rallied after after Brazil’s regulator approved a rate adjustment. The real fell 0.2 percent.
The Borsa Istanbul Stock Exchange National 100 Index dropped 1.3 percent for the biggest decline among major emerging-market indexes. The lira declined for the first time in three days.
The Shanghai Composite gained 2.2 percent, the most since March 20. Yanzhou Coal, China’s fourth-biggest coal miner, surged by the maximum daily limit. Ping An Bank Co. and Industrial Bank Co. rallied.
India’s S&P BSE Sensex (SENSEX) lost 0.8 percent, with volume 21 percent less than the 30-day average. Reliance Industries Ltd., owner of the world’s largest refining complex, decreased the most in a week, the biggest drag on the index. The rupee added 0.8 percent to 59.6550 per dollar at the close in Mumbai, gaining for the second day, boosted by steps taken by the regulators on July 8 after the currency slid to a record.
The premium investors demand to own emerging-market debt over U.S. Treasuries rose 0.04 percentage point to 337 basis points, according to JPMorgan Chase & Co.