Emerging ETF Rises on China Manufacturing as Sensex Jumps

The iShares MSCI Emerging Markets Index exchange-traded fund advanced for the first time in six days after a report showing expansion in Chinese manufacturing bolstered the outlook for global economic growth.

The ETF (EEM) tracking developing-nation shares added 1.6 percent to $38.20 in New York, the biggest gain in two weeks. The MSCI Emerging Markets Index fell 0.2 percent to 922.28, paring a slump of as much as 1.2 percent. Benchmark gauges in India, Brazil and Russia jumped more than 1.4 percent, led by commodity shares. Tata Steel Ltd. (TATA) gained 10 percent in Mumbai as Nomura Holdings Inc. raised its outlook on the industry, citing a weak rupee. Petroleo Brasileiro SA rose to a two-month high in Sao Paulo, while Russian steelmakers rallied.

The MSCI BRIC Index of stocks in Brazil, Russia, India and China rebounded from the lowest level in six weeks. Chinese manufacturing resumed its expansion this month after shrinking the most in almost a year in July and output at European factories and services companies improved. The broad measure for developing nations sank 13 percent this year amid concern that the Federal Reserve will pare its stimulus measures.

“Emerging markets are still a source of global growth,” Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama, said by phone. Stocks in developing-nations “were so oversold that some money came in to take advantage of the bounce,” he said.

The gauge of developing nations is trading at 9.8 times estimated earnings, below the valuation of developed markets of 13.6. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slid 5.4 percent to 24.62.

Trading Halt

Computer breakdowns shook American equity markets again today as malfunctioning software that feeds data between exchanges prompted Nasdaq Stock Market to halt trading in thousands of stocks and options. Trading in Nasdaq securities resumed at around 3:25 p.m. in New York, the exchange said in a statement on its website.

Brazil’s Ibovespa (IBOV) rose for the first time in three days as Cia. Siderurgica Nacional SA paced gains among Brazil’s commodity exporters. Petrobras, as Petroleo Brasileiro is known, rallied as newspapers reported that the government will allow the state-controlled oil producer to increase fuel prices. The real rebounded from the weakest level since December 2008.

Russian stocks snapped a two-day retreat as commodity companies from OAO Mechel to OAO Severstal surged. OAO Sberbank, the nation’s largest lender, snapped a five-day slump.

Tata Steel

India’s S&P BSE Sensex rallied 2.3 percent, for the biggest gain among major emerging-market indexes. Tata Steel helped send measure of metal companies to its biggest gain in more than four years. The rupee weakened 0.9 percent to 64.63 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It touched a record low of 65.56.

China’s stocks fell to a two-week low as concern the Fed will pare stimulus overshadowed a better-than-estimated manufacturing report. Emerging-market stocks dropped for a fifth day yesterday after minutes from the U.S. central bank’s last meeting showed officials support Chairman Ben S. Bernanke’s plan for trimming stimulus.

Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. and Yanzhou Coal Mining Co. led declines for material and energy companies with losses of at least 2.1 percent. ZTE Corp. advanced 1 percent after its net income jumped 27 percent.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell 0.04 percentage point to 338 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Maria Levitov in London at mlevitov@bloomberg.net; Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net

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