Emerging ETF Rises as Vale Jumps on China’s Economic Data

The iShares MSCI Emerging Markets Index exchange-traded fund advanced for a second day as Vale SA (VALE5) drove gains in commodity producers after an official report fueled optimism that China’s economic growth is picking up.

The developing-nation ETF advanced 0.6 percent to $42.74 in New York. The MSCI Emerging Markets Index declined 0.1 percent to 1,027.06, falling for a third day. ZTE Corp. and Beijing Zhongke Sanhuan High-Tech Co. rallied more than 3 percent, while Brazilian iron-ore producer Vale rose to the highest since March. The Budapest Stock Exchange Index increased to a three-month high as Hungary’s ruling party proposed aiding foreign-currency mortgage borrowers using existing tools after legal obstacles delayed new assistance measures.

China’s Purchasing Managers Index for services was 56.3 in October, up from 55.4 in the previous month, official data showed yesterday, after a manufacturing PMI (CPMINDX) on Nov. 1 that also pointed to an expansion. The nation’s top party officials will meet from Nov. 9-12 to map out a blueprint for reform.

“The Chinese data is continuing to show a pretty healthy trend,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $700 million in assets, said in a telephone interview from Lisle, Illinois. “Within EM as a whole, it’s just going to drive everything around it.”

Gauges of commodity companies in the MSCI Emerging Markets Index posted the only gains among 10 industries. The broad measure trades at 10.5 times projected earnings, compared with the valuation of 14.3 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, advanced 1.1 percent to 21.91.

Beef Plants

Brazil’s Ibovespa rose 0.8 percent after a two-week slump. Vale, whose top export market is China, advanced 2.3 percent in a fourth day of gains. Meatpacker Minerva SA climbed after agreeing to buy two beef plants from BRF SA, which will hold a 15 percent stake in the company once the deal is completed.

The Budapest Stock Exchange Index jumped 1.7 percent. OTP Bank Nyrt., Hungary’s largest lender, rose to the highest level in more than three months and the forint rallied. Benchmark indexes in the Czech Republic and Poland increased, while stocks in Turkey retreated. The Russian equity market was closed for a holiday.

Five stocks gained for every three that fell on the Shanghai Composite Index, which was was little changed. Telecommunications and technology stocks led gains on the CSI 300 Index. ZTE rose the most in almost a month, while Beijing Zhongke Sanhuan jumped 4.1 percent.

Thailand, Indonesia

Thailand’s stocks dropped by the most in six weeks and the baht slipped on speculation protests against a bill granting amnesty for political offenses will escalate and deter investment. The SET Index (SET) slid 2.9 percent, the most since Sept. 23. Indonesia’s rupiah fell to a three-week low on concern an unexpected trade deficit in September will weigh on the nation’s current account.

Woori Finance Holdings Co. sank to the lowest level in more than three weeks, leading declines among South Korean financial companies, after it reported earnings that missed estimates. The nation’s bonds fell, pushing the three-year yield to a two-week high.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose one basis point, or 0.01 percentage point, to 316 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Andras Gergely in Budapest at agergely@bloomberg.net; Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

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

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