Emerging Stocks Advance as Sensex Climbs Amid Bank Rally

Emerging-market stocks rose, snapping a three-day drop, as ICICI Bank Ltd. (ICICIBC) jumped on speculation India’s opposition party will take over government. The rand sank amid the longest South African bond slide in 15 years.

The MSCI Emerging Markets Index advanced 0.3 percent to 998.45, after briefly trimming gains on better-than-estimated U.S. economic reports. India’s S&P BSE Sensex (SENSEX) jumped to a one-month high as ICICI surged 6.5 percent on bets a new government will enact policies to bolster economic growth and curb bad loans. Steelmaker Usinas Siderurgicas de Minas Gerais SA paced a rally in Brazil’s Ibovespa. The rand sank as foreign investors dumped South African bonds for an 11th day yesterday.

India’s stocks jumped as an exit poll showed the opposition Bharatiya Janata Party is set to win four of five state elections held in the past month. The U.S. expanded at a faster pace than initially reported and jobless claims unexpectedly fell, sparking bets the Federal Reserve will trim stimulus. The MSCI Emerging Markets Index has slid as much as 16 percent since May 22, when the Fed signaled its asset-buying program could be trimmed if the economy showed improvement.

“Ultimately, any readjustment of Fed activity will have a broader implication on emerging currency and equity markets,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $150 billion of assets, said by phone. “Until we get through this, all eyes will be on that.”

Emerging ETF

The iShares MSCI Emerging Markets Index exchange-traded fund declined 0.6 percent to $41.03. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, added 1.8 percent to 26.49.

Brazil’s Ibovespa advanced amid speculation that a three-session slump was excessive. Steelmaker Usiminas, as Usinas de Minas Gerais is known, rose 7.5 percent, as Goldman Sachs Group Inc. cited the probability of price increases for the material in Brazil early next year.

Russia’s Micex Index extended a five-day drop to 3.4 percent, led by OAO Lukoil (LKOH) and OAO Gazprom. (GAZP) Ukraine’s dollar-denominated bonds gained, sending yields to the lowest this week, as President Viktor Yanukovych announced possible investments from China. The PX Index slid to a seven-week low in Prague as Vienna Insurance Group AG plunged 4 percent.

India’s S&P BSE Sensex of stocks jumped 1.2 percent to the highest level since Nov. 5 as ICICI surged. India’s benchmark will climb as much as 6 percent to a record by year-end if state elections results this weekend confirm gains by the main opposition party, according to a Bloomberg survey.

Chinese Shares

China’s stocks fell on speculation the benchmark index’s rally yesterday to a three-month high was excessive. ZTE Corp. (000063) lost the most in six weeks as investors sold shares of telecom companies after the government gave approval to domestic carriers to start offering service on a fourth-generation wireless network.

The rand slid as much as 1 percent to the lowest level since March 2009. Indonesia’s rupiah rebounded from a four-year low after Bank Indonesia said the currency is “undervalued.” South Korea’s won rose as the nation’s bonds fell, pushing the five-year yield to the highest level since June

The premium investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 333 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

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

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