Emerging-market stocks rose to a three-week high as energy producers lifted Russian shares and Indian lenders surged on central bank plans to bolster the industry. Poland’s WIG20 Index fell the most in the world.
The MSCI Emerging Markets Index added 1.1 percent to 947.67, the highest since Aug. 16. HDFC Bank Ltd. (HDFCB), India’s largest lender by market value, surged 8.1 percent. Russian oil producer OAO Rosneft (ROSN) led the Micex Index to the biggest gain in a year. The WIG20 Index tumbled 4.6 percent, the most among 94 gauges tracked by Bloomberg, as Poland unveiled changes to its pension system. The Brazilian real advanced to a three-week high after policy makers sold foreign-exchange swap contracts.
Energy shares led gains among the 10 industries in the measure of developing nations as crude oil jumped. Reserve Bank of India Governor Raghuram Rajan announced a plan yesterday to provide concessional swaps for banks’ foreign-currency deposits a move that will boost the authority’s reserves by $10 billion, according to Bank of America Merrill Lynch. India’s lower house of parliament passed a bill yesterday allowing international holdings in pension funds in a bid to shore up the rupee.
“There’s optimism India’s new central bank will help get the house in order,” said Jonathan Ravelas, the chief market strategist at Manila-based BDO Unibank Inc. “These gains in emerging-market assets indicate some recovery in investor confidence. It’s probably a temporary respite until the start of tapering in U.S. stimulus.”
Investors also watched U.S. economic reports for clues on how soon the Federal Reserve will start tapering its bond-buying program. Fewer Americans than forecast filed applications for unemployment benefits last week, while growth at U.S. service industries unexpectedly accelerated in August. The employment report for August is due tomorrow.
Emerging-market economic growth recovered in August from the first contraction since 2009 as business conditions improved in China and Russia, HSBC Holdings Plc said, citing a survey of purchasing managers.
The iShares MSCI Emerging Markets Index exchange-traded fund rose 1.2 percent to $39.40. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slid 3 percent to 25.89.
Brazil’s Ibovespa rose 1.2 percent, reversing a decline of as much as 0.9 percent, as Petroleo Brasileiro SA (PETR3), Brazil’s state-run crude producer, surged. The real added 1.5 percent.
The Micex Index gained 3.4 percent, the most since September 2012 and the best-performance among 17 markets in eastern Europe tracked by Bloomberg. OAO Rosneft, Russia’s biggest oil producer, added 4.3 percent. OAO Gazprom (OGZD), the nation’s largest company, jumped 6 percent.
The WIG20 index slid 4.6 percent. Bank Handlowy SA dropped 8.4 percent, while Globe Trade Centre SA, a property developer, lost 8.1 percent. Poland will take over and cancel government bonds held by its privately managed pension funds, stopping short of fully “nationalizing” the system as it seeks to curb public debt, Prime Minister Donald Tusk said yesterday.
The lira touched a record low against the dollar as measures taken by the central bank failed to allay concern Turkey’s economy will be hurt if its neighbor Syria is attacked in a U.S.-led military strike.
Indian stocks surged the most among major Asian markets, as HDFC led by the biggest rally in lenders since May 2009. The rupee jumped 1.5 percent after the new central bank governor took steps to boost dollar supply.
China’s stocks fell for the first time in five days, led by material producers and steelmakers, after valuations for the benchmark index climbed to the highest level since June. Aluminum Corp. of China Ltd. and Jiangxi Copper Co. (358) declined at least 1.7 percent, sending a gauge of material producers to the biggest loss among industry groups.
The won dropped, reversing an earlier gain, on speculation authorities intervened to weaken the currency after it reached the strongest level in almost four months.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell 10 basis points, or 0.1 percentage point, to 344 basis points, according to JPMorgan Chase & Co.
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