Emerging ETF Rallies as U.S. Jobs Data Outweigh Fed Bets

The iShares MSCI Emerging Markets Index exchange-traded fund jumped the most in three weeks after a better-than-estimated U.S. employment report outweighed concern the Federal Reserve will reduce economic stimulus.

The developing-nation ETF advanced 1.8 percent to $41.77 at 10:54 a.m. in New York. The MSCI Emerging Markets Index added 0.5 percent to 1,003.46. The Borsa Istanbul National 100 Index climbed 1.9 percent, led by Turkiye Garanti Bankasi AS (GARAN), while Russia’s Micex Index jumped the most in three weeks. India’s 10-year bonds declined for a seventh day amid concern outflows from local-currency debt may quicken. South Africa’s rand rebounded from a four-year low, driving gains in currencies.

Stocks joined a global rally after the U.S. jobless rate dropped to a five-year low as American employers added more workers than forecast. The dollar rallied on bets the figures may prompt the Federal Reserve to advance its timetable for a tapering of the bond purchases. The gauge for stocks in developing nations has slid 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.

“If and when tapering actually occurs, you’ll find that it’s a probably a non-issue, because the market has already priced in what a post-tapering world will look like,” Kunal Ghosh, a San Diego-based portfolio manager at Allianz Global Investors, which has $436 billion in assets under management, said by phone. “At this point, it has become a non-issue for the EM countries when the actual tapering happens.”

All 10 groups in the MSCI Emerging Markets Index advanced today, led by health-care and consumer shares. The broad measure trades at 10.5 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, tumbled 5.3 percent to 25.08.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose one basis point, or 0.01 percentage point, to 335 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Zahra Hankir in London at zhankir@bloomberg.net; Taylan Bilgic in Istanbul at tbilgic2@bloomberg.net

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

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