Emerging-Market Stocks Rise Most in 2012 on EU Meeting

Emerging-market stocks rose the most in eight months after European leaders agreed to ease repayment conditions for loans to Spanish banks, boosting demand for riskier assets.

The MSCI Emerging Markets Index jumped 3.4 percent to 937.35 by the close in New York, the steepest gain since Oct. 27. Energy companies rallied the most since October as OGX Petroleo e Gas Participacoes SA surged in Sao Paulo after naming a new chief executive officer. Brazil’s Bovespa rose 3.2 percent while Russia’s Micex Index added the most in four months. The Hang Seng China Enterprises Index of Hong Kong-traded Chinese shares rose by 2.6 percent.

European leaders agreed to drop requirements that governments receive preferred creditor status on crisis loans to Spain’s banks and relax conditions on potential help for Italy. The 21 countries in MSCI’s emerging-market index send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show. Consumer spending in the U.S. was unchanged.

European authorities “worked really hard and they did make some progress on a number of important issues, although we are still far away from what I would call a major breakthrough, which is ultimately what we need,” Benoit Anne, head of emerging-market strategy at Societe Generale, wrote in an e-mailed note to clients today. “The most significant development is probably the tiny steps towards creating a banking rescue framework at the EU level.”

Quarterly Moves

Brazil, Russia, India and China, the four largest emerging markets, count the EU as their largest export destination, the WTO data show.

MSCI’s index of developing nations has slumped 10 percent since the end of March.

The Hang Seng China Enterprises Index has fallen 10 percent in the quarter, Russia’s Micex Index has declined 8.6 percent and Brazil’s Bovespa has fallen 16 percent.

The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF tracking developing-nation shares, added 4.4 percent to $39.14 today.

The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, dropped 10 percent to 25.79.

Emerging Outflows

Emerging equity funds posted $8.7 billion of outflows in the second quarter, Citigroup Inc. analysts wrote in a report today, citing data compiled by EPFR Global.

The Micex Index gained 3.3 percent in Moscow, the biggest advance since Feb. 24. OAO Sberbank, Russia’s biggest lender, jumped 4.3 percent.

Brazil’s Bovespa added 3.2 percent, the most since May 21. MMX Mineracao e Metalicos SA jumped 17 percent after falling to the lowest since 2009 in Sao Paulo yesterday.

OGX Petroleo, the Brazilian oil company owned by billionaire Eike Batista, surged 8.9 percent in Sao Paulo. The company named Luiz Carneiro the new chief executive officer after a plunge in the shares wiped out $3.8 billion of Batista’s wealth. Luiz Carneiro will replace Paulo Mendonca, the company said yesterday in a regulatory filing.

Energy companies added 4.3 percent, the biggest jump since Oct. 27.

China, Turkey

China Life Insurance Co. jumped 3.3 percent in Hong Kong after China announced plans to support overseas financial institutions in setting up headquarters in the Qianhai zone at Shenzhen.

Turkiye Garanti Bankasi AS, Turkey’s biggest listed bank, added 3.2 percent in Istanbul, helping the ISE National 100 Index advance 2.8 percent to the highest level since April 3.

KGHM Polska Miedz SA, the largest European-based producer of copper, climbed 2.1 percent in Warsaw as the industrial metal rose in London. The WIG20 Index rose 1.7 percent.

South Africa’s benchmark stocks index was led higher by miners. The Kospi Index of stocks climbed 1.9 percent in Seoul.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 18 basis points, or 0.18 percentage point, to 374, according to JPMorgan’s EMBI Global Index.

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