Emerging-market stocks capped the longest rally since March, currencies gained and bond yields retreated, as a rebound in U.S. manufacturing bolstered optimism that global economic growth will pick up.
The MSCI Emerging Markets Index increased 0.2 percent to 941.93, advancing a fifth day. Gold producers led South Africa’s FTSE/JSE Africa All Share Index higher, while Brazilian billionaire Eike Batista’s OGX Petroleo & Gas Participacoes SA paced declines in Sao Paulo. South Korea’s won climbed the most in almost five months and the premium investors demand to own emerging-market debt over U.S. Treasuries retreated for a fifth consecutive day, according to JPMorgan Chase & Co.
American manufacturing rose more-than-forecast in June, showing gains in the U.S. housing market and stronger auto sales are helping stabilize industry. Egypt’s borrowing costs and credit risk climbed to a record after masses poured into the streets demanding President Mohamed Mursi step down. The iShares MSCI Emerging Markets Index exchange-traded fund rose for a fifth day, adding 0.3 percent to $38.62.
The U.S. data was “mildly better than consensus,” David Sowerby, who helps oversee about $190 billion at Loomis Sayles & Co. in Bloomfield Hills, Michigan, said by phone. “For an investor who can be patient, emerging markets present value.”
Seven out of 10 groups in the MSCI Emerging Markets Index gained, led by health-care and commodity shares. The broad measure has slumped 11 percent this year, compared with a 7.9 percent advance in a measure of developed nations’ stocks. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, fell 7.1 percent to 25.64.
Brazil’s Ibovespa slid as economists cut estimates for Brazil’s growth. OGX plunged 29 percent after saying it may shut its only producing wells next year. Mining company MMX Mineracao & Metalicos SA and port developer LLX Logistica SA, also controlled by Batista, dropped.
The Micex Index rebounded in Moscow after the worst quarterly slump in a year as metal producers rallied. OAO Novolipetsk Steel increased 3.3 percent, after slumping 12 percent last quarter. OAO Rostelecom jumped 1.7 percent as Russia’s largest fixed-line operator started accepting offers from shareholders after proposing to buy back stock at a premium to the market.
Turkish shares gained, while benchmark gauges Poland, the Czech Republic and Hungary retreated. South Africa’s equity benchmark gained a fifth day as DRDGold Ltd. surged 6.1 percent.
Chinese stocks completed the first back-to-back gain in a month as money-market rates slumped. The Shanghai Composite Index advanced 0.8 percent as PetroChina Co. rose for a third day after the biggest energy producer slid to a record low last week. Hong Kong’s markets were shut for a holiday.
India’s S&P BSE Sensex rose 0.9 percent, after the most in 18 months on June 28. Reliance Industries Ltd., owner of the world’s largest refining complex, reached a five-month high.
The cost of protecting Egyptian debt against default for five years soared 43 basis points today to 925, according to CMA. The contracts surged 261 basis points in June. The stock market was closed for a holiday. Anti-government demonstrations intensified today, with protesters storming the Cairo headquarters of the Muslim Brotherhood and setting it ablaze.
South Korea’s won advanced the most in almost five months as data showed the nation’s June trade surplus was near the highest level since 2010. Bonds fell.
The extra yield for emerging-market debt over U.S. Treasuries declined three basis points, or 0.03 percentage point, to 337 basis points, according to JPMorgan’s EMBI Global Diversified Index.