Emerging-market stocks rose as China’s plans to restart initial public offerings boosted brokerage shares. Malaysia’s ringgit gained the most among peers, while Turkey’s lira weakened.
Citic Securities Co. (600030) climbed 1.9 percent in Hong Kong and 3.3 percent in Shanghai to lead advances for brokerages as China approved share sales by five companies after a yearlong IPO freeze. Dubai’s DFM General Index, the world’s best-performing gauge in 2013, rose to the highest level since October 2008. Turkey’s shares resumed declines spurred by a corruption probe after rallying 6.4 percent yesterday. Markets in Brazil, Russia, Hungary, the Czech Republic, Poland, Indonesia, Thailand and South Korea were shut.
The MSCI Emerging Markets Index rose 0.1 percent to 1,002.69 in New York, trimming this year’s loss to 5 percent. Gauges of material and energy companies fell 19 percent and 14 percent respectively in 2013, the most among the 10 industry groups, as slowing Chinese economic growth cut demand for raw materials and the U.S. prepared to scale back stimulus. U.S. data showed today that consumer confidence increased in December and housing prices jumped in October.
In 2014, “emerging Markets need to first of all deal with the side-effects of Fed tapering in the first half,” Simon Quijano-Evans, head of emerging-markets research at Commerzbank AG in London, said by e-mail. “Then comes the positive spillover in the second half from the global recovery.”
The emerging stocks measure is valued at 10.5 times projected earnings for the next 12 months, a 29 percent discount to the MSCI World Index of developed nations, the biggest gap in five years. The developed-country gauge has advanced 24 percent in 2013.
The iShares MSCI Emerging Markets Index exchange-traded fund added 0.8 percent to $41.80. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, increased 2.4 percent to 21.72.
Citic Securities (6030), China’s biggest-listed brokerage, rallied amid speculation new share offerings will boost earnings. Five companies including Neway Valve (Suzhou) Co. and Truking Technology Ltd. were approved by the China Securities Regulatory Commission to raise a combined $353 million from IPOs.
“IPOs will bring investment-banking revenue to the brokerages and help to boost profit,” said Wei Wei, an analyst at West Securities Co. in Shanghai.
China, which witnessed $71 billion of share sales in 2010, the most in the world, hasn’t had an offering since October 2012 as the securities regulator cracked down on fraud and misconduct among advisers and companies. About 50 companies are expected to complete the IPO approval preparations and list or be ready to do so by the end of January, the CSRC said.
Stocks in Dubai, which will be added to the emerging-markets index in 2014, rose 1.1 percent, taking this year’s advance to 108 percent, the most among 93 global equity gauges tracked by Bloomberg. Dubai Financial Market PJSC, the only publicly traded stock market on the Arabian Peninsula, drove today’s gains with a 6 percent jump.
Egypt’s benchmark EGX 30 Index was little changed, leaving the increase in 2013 at 24 percent. Telecom Egypt, the monopoly fixed-line phone operator, added 2.1 percent after the nation’s telecommunications regulator approved a license that will allow the company to offer mobile services.
The lira, the worst performing emerging-market currency in December, depreciated 1.2 percent per dollar following yesterday’s 1.5 percent rally. The Turkish central bank will sell at least $600 million at a foreign-exchange auction. The Borsa Istanbul 100 Index (XU100) retreated 0.3 percent after surging the most in more than three months yesterday. The index has declined 13 percent this year.
The Shanghai Composite Index (SHCOMP) rose 0.9 percent at the close, paring the loss in 2013 to 6.8 percent, the worst-performing market in Asia. China’s equities have fallen amid concern slowing economic growth will curb profits.
The Chinese government unveiled the biggest reform package since the 1990s last month, pledging to allow more private investment in state-controlled industries, after earlier promising to give markets a greater role in shaping the economy.
India’s Sensex added 0.1 percent for a second year of gains with a 9 percent advance. Apollo Tyres Ltd. (APTY) jumped to its highest since at least 1991 in Mumbai trading today after Cooper Tire & Rubber Co. dropped a $2.5 billion merger plan.
The ringgit climbed 0.6 percent to 3.2757 per dollar, narrowing the 12-month loss to 6.7 percent, the most since 1997. The decline came amid speculation capital inflows will slow as the Federal Reserve trims its record monetary stimulus. The Indonesian rupiah and the Indian rupee appreciated at least 0.2 percent, reducing drops for Asian currencies in their worst year since the 2008 global financial crisis.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell six basis points, or 0.06 percentage point, to 304 basis points, according to JPMorgan Chase & Co. indexes.
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