Emerging Equities Advance as Micex Rallies; Rand Gains

The iShares Emerging Markets exchange-traded fund dropped as the Ibovespa Index slid amid signs the global economic recovery is slowing. The rand gained as South Africa’s metals union moved toward ending a strike.

The ETF fell 0.4 percent to $43.94 at 10:34 a.m. in New York. The MSCI Emerging Markets Index was little changed at 1,064.32. The Ibovespa dropped 0.5 percent led by brewer Ambev SA. PT Bank Rakyat Indonesia (BBRI) jumped 6.2 percent to lead the Jakarta Composite Index to a seven-week high on bets Joko Widodo will win tomorrow’s presidential election. The rand strengthened 0.7 percent, the most among 24 emerging currencies tracked by Bloomberg.

U.K. manufacturing unexpectedly slumped the most in 16 months in May and German exports contracted more than estimated, data showed today. In Indonesia, Widodo widened his lead over Prabowo Subianto to 3.6 percentage points in a poll released by Lingkaran Survei Indonesia yesterday.

“The question in Europe is ‘has the growth rate been overestimated?’” Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama, said by phone. “Emerging-markets looked like they were going to get some running room, but questions on growth in non-EM economies drag them down, as they would suffer if the rest of the world slows.”

The PX Index dropped 1.9 percent in Prague as Erste Group Bank AG slumped 4.3 percent after last week saying it expects to post a record loss. The Dubai DFM General Index fell 1 percent, Poland’s benchmark lost 0.7 percent and the Budapest Stock Exchange Index slid 1.1 percent.

Rand Gains

The ruble strengthened 0.5 percent against the central bank’s target basket of dollars and euros, snapping a two-day decline, as exporters converted overseas revenue into rubles. The Micex Index of Russian shares gained 0.2 percent after surging 1.6 percent yesterday as the country called for a renewal of peace talks in Ukraine.

The rand advanced the most since June 25, after the Labor Ministry said the South African union leading a walkout by 220,000 metalworkers is close to an agreement with employers on wage increases and will resume talks to end a week long strike.

The Jakarta Composite Index (JCI) rose 0.7 percent, extending its rally to a third day. Bank Rakyat, Indonesia’s second-largest lender by market value, jumped to a record. Local financial markets will be closed tomorrow for the elections and quick-count results will become available in the afternoon.

Malaysian Rates

Malaysia’s ringgit rallied to the highest level since Nov. 20 on bets the nation’s central bank will become the first in Southeast Asia to raise its benchmark interest rate this year. Bank Negara Malaysia will increase borrowing costs to 3.25 percent from 3 percent on July 10, according to 14 of 19 economists surveyed by Bloomberg.

The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong climbed 0.2 percent. China Longyuan Power Group Corp. tumbled 5.4 percent in Hong Kong after the stock was cut to neutral at HSBC Holdings Plc.

The Shanghai Composite Index (SHCOMP) added 0.2 percent to a three-week high before the release of inflation data tomorrow. Chinese consumer prices probably rose 2.4 percent in June, slowing from May’s 2.5 percent gain, according to the median estimate of 51 economists surveyed by Bloomberg.

The S&P BSE Sensex (SENSEX) index slumped 2 percent, the most since Jan. 27, as investors speculated gains that send the benchmark index to a record high yesterday have gone too far.

Six out of 10 industry groups in the MSCI Emerging Markets Index rose, led by consumer stocks. The premium investors demand to own emerging-market debt over U.S. Treasuries rose two basis points to 263, according to JPMorgan Chase & Co. indexes.

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Natasha Doff in London at ndoff@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Matthew Brown, Richard Richtmyer

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