Emerging-market stocks rose a sixth day as Russian shares rebounded from the biggest drop in a week and Indonesia’s equities and currency rallied before elections.
The MSCI Emerging Markets Index climbed 0.2 percent to 1,064.39. The six-day gain was the longest winning streak since early April. OAO Lukoil (LKOH) led the Micex Index (PALMCEX) to a 1.6 percent advance in Moscow. Ukraine’s UX Index increased 1.7 percent. The rupiah was the best performer among Asian currencies on optimism Joko Widodo’s pledge to fight corruption will help him win a presidential vote this week. The Ibovespa sank as Brazilian exporters dropped with commodities.
Ukrainian President Petro Poroshenko pledged to continue an offensive against pro-Russian rebels after his forces retook key insurgent strongholds. A durable cease-fire is needed in the wake of the “sharp deterioration of the situation,” Russian Foreign Minister Sergei Lavrov said July 5.
“Equity markets, being very forward-looking, may be just pricing in the fact that we might be seeing the end of the most acute military stage of the fight in Ukraine,” Ivan Tchakarov, chief Russia economist at Citigroup Inc. (C) in Moscow, said in e-mailed comments.
The developing-nation gauge has gained 6.2 percent this year and trades at 11.1 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 5.7 percent in the period, and is valued at a multiple of 15.2.
The stock valuations are flashing a buy signal to Barclays Plc (BARC), according to Dennis Jose, a global and European equity strategist in London. “Emerging-market equities are performing better than developed-market equities as they’re cheaper, and there’s still room for growth,” Jose said by phone last week.
The Micex, which has the cheapest valuations among the biggest developing markets tracked by Bloomberg, fell 1.7 percent on July 4.
Lukoil climbed 2.4 percent today to lead gains in the Russian gauge, which trades at 5.5 times estimated earnings. Ukrainian stocks added 1.7 percent after last week losing 2.7 percent, the most since April. The WIG Ukraine Index rose 0.5 percent in Warsaw, snapping a five-day decline.
Equities in Poland advanced 0.7 percent. The Borsa Istanbul 100 Index increased 1.8 percent in the third day of gains. The Ibovespa dropped 0.5 percent in Sao Paulo as iron-ore producer Vale SA sank 1.4 percent.
African Bank Investments Ltd. (ABL) surged 17 percent in Johannesburg after starting talks to sell its unprofitable furniture retailer. The FTSE/JSE Africa All Share Index fell 0.4 percent.
Seven of 10 industry groups in the MSCI Emerging Markets Index rose, led by health-care shares. HSBC Holdings Plc (HSBA) raised its rating on developing-economy stocks to overweight and upgraded Russian and Indian equities to neutral, according to a note to by strategists Garry Evans and Daniel Grosvenor.
India’s S&P BSE Sensex (SENSEX) advanced for a second day, gaining 0.5 percent to a record. The equity gauge has jumped 23 percent this year as international investors poured $10.5 billion into the nation’s shares on expectations Narendra Modi’s government will spur an economy growing at near the slowest pace in a decade.
The Jakarta Composite Index rose 1.7 percent to the highest close since May 19 after Widodo, known as Jokowi, participated in the final leaders’ debate. Indonesia will elect a new president at a July 9 election that survey company Roy Morgan said is “too close to call.” The rupiah gained 1.4 percent against the dollar.
The Shanghai Composite Index and the Hang Seng China Enterprises Index were both little changed. Dubai’s DFM General Index retreated 0.9 percent, ending a four-day rally. Bulgaria’s Sofix Index (SOFIX) lost 2.4 percent, the most since June 26.
President Rosen Plevneliev asked the government to revise the nation’s budget and to “present the real parameters of its implementation,” according to an e-mailed statement.
The premium investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 260 basis points, according to JPMorgan Chase & Co. indexes.
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