Emerging-market stocks advanced the most in 11 weeks as commodities rallied after U.S. politicians expressed confidence they will reach a budget deal and Goldman Sachs Group Inc. upgraded Indian shares.
OAO MegaFon, Russia’s second-largest mobile-phone provider, climbed above its initial offer price on the second day of London trading. Brazilian steelmaker Usinas Siderurgicas de Minas Gerais SA rallied. Gold Fields Ltd., the world’s fourth-biggest gold producer, gained the most in a year on plans to spin off some South African operations. Franshion Properties China Ltd. rose the most on the benchmark gauge for emerging-market stocks as ICBC International said the developer met its sales target.
The MSCI Emerging Markets Index gained 1.3 percent to 1,003.79 in New York, the highest since Nov. 7. The BSE India Sensitive Index jumped 1.7 percent to the highest close since April 2011 as Goldman Sachs upgraded the country’s shares to overweight. The world economy is at its healthiest in 18 months, with the U.S. looking likely to avoid tax increases and spending cuts, the latest Bloomberg Global Poll of investors showed. Commodities climbed for the first time this week.
“Global risk appetite and investor sentiment has been improving,” Neil Shearing, chief emerging markets economist at Capital Economics Ltd., said by phone from London. “We’ve had pretty good data from the U.S. on top of hopes for action to avoid the fiscal cliff, and commodities are up, so that’s all supportive.”
U.S. Treasury Secretary Timothy F. Geithner met today with congressional leaders as part of an effort to avert the so-called fiscal cliff, automatic spending cuts and tax increases that are set to begin Jan. 1.
Senate Majority Leader Harry Reid said Democrats were on the same page on budget talks as Senator Chuck Schumer said there has been progress. The comments countered remarks from Republican House Speaker John Boehner, who said today no progress was being made toward a compromise.
“Much of the concerns over the U.S. budget issues appear to be already reflected and any progress on talks will help boost investors’ sentiment,” Heo Pil Seok, chief executive officer at Midas International Asset Management Ltd., which oversees $5.3 billion, said by phone in Seoul.
The U.S. economy expanded more than previously estimated at a 2.7 percent annual rate in the third quarter on a narrower trade deficit and gains in inventory, revised figures from the Commerce Department showed today. The 21 nations in MSCI’s developing-nations gauge send about 17 percent of their exports to the U.S. on average, data compiled by the World Trade Organization show.
The Standard & Poor’s GSCI gauge of 24 raw materials advanced 1.1 percent, halting three days of declines, as oil jumped 1.8 percent to $88.07 a barrel and copper climbed 1.9 percent to a five-week high on the Comex in New York.
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, rose 0.7 percent to $41.82. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slid 1.5 percent to $21.83.
Russia’s Micex Index climbed for the first time in four days, trading 0.5 percent higher as oil rebounded. Brazil’s Bovespa index gained 2.3 percent and Pakistan’s benchmark stock index advanced 0.6 percent to a record. Benchmark indexes in the Czech Republic, Hungary and South Africa all gained more than 1 percent.
The Hang Seng China Enterprises Index of mainland companies list in Hong Kong increased 0.9 percent as Goldman Sachs and Citigroup Inc. predict Chinese stocks will rally next year. South Korea’s Kospi index added 1.2 percent, its steepest gain since Sept. 14. The Shanghai Composite Index lost 0.5 percent, declining for a fourth day, as brokerages tumbled.
The MSCI Emerging Markets Index’s 50-day volatility held near the lowest level since 2004. Commodity producers and consumer discretionary companies led gains among the broader index’s 10 industry groups, climbing at least 2 percent.
The MSCI developing nation index has risen 9.5 percent this year, trailing an 11 percent gain by the MSCI World Index of developed countries. The emerging-market gauge traded at 11.6 times estimated profit, compared with the MSCI World’s 13.3, according to data compiled by Bloomberg.
MegaFon, Gold Fields
MegaFon, Russia’s second-largest mobile-phone provider, rallied 4.6 percent to $20.50, reversing yesterday’s 2 percent decline. The depositary receipts qualify for early entry into the Russia index, effective Dec. 12, MSCI said in an e-mailed report today. MegaFon raised $1.7 billion in the biggest initial public offering by a Russian company in three years.
Gold Fields jumped 5.7 percent, the most since September 2011, as the benchmark gauge for South African equities climbed to a record level.
Cia. Siderurgica Nacional SA, Brazil’s third-largest steelmaker, rallied 9.6 percent after Banco Santander SA raised the stock to buy from underperform as the government shields the industry from import competition. Usinas Siderurgicas de Minas Gerais, known as Usiminas, increased 6.1 percent to an eight-month high.
Franshion, a Hong Kong-based real estate developer with projects on the mainland, jumped 9.8 percent and Evergrande Real Estate Group Ltd. rallied 5.6 percent after Moody’s Investors Service raised its outlook on the company’s credit rating.
Indian stocks surged, with Tata Motors Ltd. rising 4.4 percent and ICICI Bank Ltd. adding 4.6 percent. Goldman Sachs upgraded the nation’s equities, citing recovery in growth, continued policy reforms and declining inflation.
“With structural issues being addressed and a cyclical recovery on the horizon, the equity market may bounce strongly next year,” Goldman Sachs said in a report dated today.
India’s rupee was the best performing emerging market currency rising 1.2 percent against the dollar, the most in more than two months, followed by a 1.1 percent advance in the Russian ruble.
Hyundai Motor Co., South Korea’s biggest carmaker, advanced 2.7 percent, while affiliate Kia Motors Corp. rallied 4.7 percent. The companies’ market share in the BRIC countries of Brazil, Russia, India and China increased to 8.2 percent in October and strong sales will continue for the rest of the year, Shinhan Investment Corp. said in a report.
Centrais Eletricas Brasileiras SA sank 7.5 percent, the worst performer in the emerging-markets gauge, as the company’s 30-day price volatility soared to the highest level in at least a decade. The stock has fallen 52 percent in November, the worst monthly decline on record.
LG Display Co., the world’s second-biggest maker of liquid-crystal displays, slipped 3.8 percent in Seoul. Bank of America Merrill Lynch cut its rating on the stock to neutral, citing limited upside potential in the share price.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell two basis points, or 0.02 percentage point, to 289, according to JPMorgan Chase & Co.’s EMBI Global Index.