The iShares MSCI Emerging Markets Index exchange-traded fund slumped, reversing earlier gains, after the Federal Reserve maintained the pace of stimulus while saying policy makers see improvement in economic activity.
The developing-nation ETF declined 0.5 percent to $42.90 at the close in New York, after rising as much as 0.4 percent earlier today. The MSCI Emerging Markets Index advanced 0.6 percent to 1,042.75. OGX Petroleo e Gas Participacoes SA (OGXP3) plunged 26 percent after the Brazilian oil company filed for bankruptcy protection. India’s S&P BSE Sensex (SENSEX) jumped to an all-time high as Bharti Airtel Ltd. (BHARTI) reported better-than-estimated sales.
The Fed decided to press on with $85 billion in monthly bond purchases, saying it needs to see more evidence that the economy will continue to improve even amid signs of “underlying strength.” The gauge for stocks in developing nations has retreated as much as 16 percent since May 22, when the U.S. central bank signaled its asset-buying program could be trimmed if the economy showed sustained improvement.
“The statement was pretty ho-hum,” Sameer Samana, the St. Louis-based international strategist at Wells Fargo Advisors LLC, said by phone. His firm oversees about $1.3 trillion. “This meeting was as close to expectations as you could have asked for. Because things have already rallied so much, people are somewhat willing to take some profits.”
The MSCI Emerging Markets Index has surged 5.6 percent in October, on pace for its first back-to-back monthly advance since January. It trades at 10.6 times projected earnings, compared with the valuation of 14.4 for the MSCI World Index. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rallied 3.7 percent to 21.59.
Russian stocks erased earlier gains as OAO Lukoil joined a slump in crude. OAO Magnit, the nation’s largest retailer jumped after Morgan Stanley lifted its share-price estimate for the company’s global depositary receipts by 23 percent to $80.
The 30-stock S&P BSE Sensex extended this year’s rally to 8.3 percent. Bharti Airtel, the nation’s largest mobile-phone operator, climbed to a nine-month high. ICICI Bank Ltd. (ICICIBC), the second-biggest lender, increased 2.3 percent. The S&P BSE Bankex Index closed at a three-month high.
The Shanghai Composite Index rose 1.5 percent, the biggest gain since Oct. 21. The Communist Party said a key meeting to discuss economic-policy reforms will run for four days through Nov. 12. Politburo member Yu Zhengsheng has said reforms to be discussed will be unprecedented.
PetroChina Co. (601857) gained the most in four months after posting a 19 percent increase in profit. China Petroleum & Chemical Corp. (386) jumped 3.5 percent as Morgan Stanley said shares may “re-rate” after the company’s earnings beat estimates.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell five basis points, or 0.05 percentage point, to 313 basis points, according to JPMorgan Chase & Co.
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