Emerging-market stocks rose, extending a weekly rally, amid speculation global central banks will keep economic stimulus measures. Infosys (INFO) Ltd.’s better-than-estimated sales forecast lifted technology companies.
The MSCI Emerging Markets Index rose 0.3 percent to 945.36, driving its weekly gain to 3 percent. Infosys surged the most in six months in Mumbai and banks paced rally in the Borsa Istanbul Stock Exchange National 100 Index. Chinese stocks tumbled on concern the government may tolerate a slower-than-indicated pace of growth, while the nation almost doubled foreign funds’ access to capital markets. Brazil’s Ibovespa (IBOV) and the real led declines among major developing-nation stock benchmarks and currencies.
European Central Bank executive board member Vitor Constancio said the euro area’s slow recovery implies that policy has to stay “accommodative for a longer period of time,” following this week’s comment by Federal Reserve Chairman Ben S. Bernanke that the U.S. economy will continue to need stimulus. China’s Finance Minister Lou Jiwei said a 6.5 percent growth rate wouldn’t be a “big problem.”
“Anything that delays the idea of tightening is overall beneficial to emerging markets,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management which oversees $180 billion, said by phone. “There’s still a lot of confusion about what is going to happen in China. We’re not going to step in until we see a bottoming of expectations.”
The iShares MSCI Emerging Markets Index exchange-traded fund slid 1.1 percent to $38.94. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, advanced 6.6 percent to 27.29.
Eight out of 10 groups in the MSCI Emerging Markets Index rose today as health-care, phone and energy companies had the biggest gains. The broad measure has slumped 10 percent this year, compared with a 12 percent jump in the MSCI World Index. The developing-nation gauge trades at 9.9 times projected earnings, lower than the MSCI World’s valuation of 13.7, according to data compiled by Bloomberg.
Brazil’s Ibovespa dropped 2.3 percent after the economy contracted more than forecast in May. LLX Logistica SA, OGX Petroleo e Gas Participacoes SA and MMX Mineracao e Metalicos SA, which are controlled by billionaire Eike Batista, were the worst performers on the index. The real slid 0.5 percent.
Mexico’s stocks and the peso declined after the nation’s central bank kept its overnight rate at a record low as policy makers balance slowing growth with above-target inflation and a weakening currency in Latin America’s second-biggest economy.
The Micex Index (INDEXCF) rallied 2.2 percent in Moscow as Russia’s central bank said it will start a new loan facility to improve banks’ access to cash after leaving interest rates unchanged today. OAO Sberbank added 2.7 percent.
Turkish stocks led gains among major emerging-market indexes, rallying 3 percent. Asya Katilim Bankasi AS, a Turkish Islamic lender, posted its biggest gain in five weeks after Bank of America Corp. recommended buying the stock. Czech Republic’s benchmark gauge rallied a third day and stocks in Hungary and Poland also rose.
The S&P BSE Sensex (SENSEX) soared to a six-week high as Infosys, the second-largest software exporter, climbed 11 percent. The rupee completed its first weekly gain since May.
The Shanghai Composite slid 1.6 percent as China Minsheng Banking Corp., China Shenhua Energy Co. (601088) and Jiangxi Copper Co. led declines for financial and commodity companies. Finance Minister Lou said he’s confident in achieving a 7 percent growth rate this year. That’s below the government’s official growth target of 7.5 percent.
The Qualified Foreign Institutional Investor program will expand to $150 billion from $80 billion, while a similar plan for Hong Kong-based yuan investors will grow to encompass Singapore, London and other cities, the official Xinhua News Agency reported today, citing the China Securities Regulatory Commission. The report didn’t identify the other locations.
The premium investors demand to own emerging-market debt over U.S. Treasuries slid 0.06 percentage point to 332 basis points, according to JPMorgan Chase & Co.
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