Sept. 19 (Bloomberg) -- Emerging-market climbed to a four-month high, bond yields plunged and Malaysia’s ringgit posted the biggest advance since 1998 after the Federal Reserve refrained from cutting stimulus.
The MSCI Emerging Markets Index added 2.2 percent to 1,022.54. The iShares MSCI Emerging Markets Index exchange-traded fund dropped after the gap to its net asset value swelled to the widest since 2008. The Borsa Istanbul National 100 Index had the biggest gain among 94 world gauges, entering a bull market. The ringgit rose 2.6 percent. The extra yield investors demand to own developing-nation government dollar debt instead of U.S. Treasuries slid the most since July 2012.
The Federal Open Market Committee yesterday refrained from reducing the $85 billion pace of its monthly securities buying, spurring a rally in global equities as investors repositioned for a more accommodative central bank. The measure for stocks in developing nations has retreated as much as 16 percent since May 22, when the Fed signaled its asset-buying program could be trimmed if the U.S. economy showed sustained improvement.
“The good news was that the markets don’t have to worry about the taper they were concerned about,” Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland said by phone. “They set up pretty strong expectations they would begin to taper.”
All 10 groups in the MSCI Emerging Markets Index rose today as financial and energy shares had the biggest gains. The measure for developing markets trimmed this year’s decline to 3.1 percent, trading at 10.8 times projected earnings, according to data compiled by Bloomberg. That trails the 14.2 valuation of the MSCI World Index.
The iShares MSCI Emerging Markets Index ETF, which trades under the ticker EEM, dropped 0.5 percent, after surging 4.2 percent yesterday. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, slid 4.6 percent to 21.81.
“The EEM jumped like a rocket ship after the Fed yesterday,” Dave Lutz, the head of exchange-traded fund trading and strategy at Stifel Nicolaus & Co. in Baltimore, said by phone. “You do get a deviation in the EEM relative to the index or those underlying simply because the EEM is trading in the U.S. while the underlying companies are closed.”
Brazil’s Ibovespa fell for the first time in five days as pulp maker Fibria Celulose SA led exporters lower. The real retreated from a three-month high after Finance Minister Guido Mantega said that the central bank may curtail its intervention in the foreign-exchange market.
Brazilian state development bank president Luciano Coutinho said he expects currency volatility to increase because the Fed didn’t start tapering.
“For us, the sooner it starts and ends, the better,” Coutinho said in an interview at Bloomberg’s headquarters in New York yesterday. “I would rather see it start today and have some date to finish because then we will feel the whole impact. The worst thing is the uncertainty.”
The Micex Index climbed 1.5 percent, the highest since March 15. OAO Sberbank, the nation’s largest lender, rose 2.8 percent. The ruble posted a record streak of gains against the dollar, advancing for a 10th consecutive day.
The Borsa Istanbul National 100 Index jumped the most since May 2010. Turkiye Garanti Bankasi AS, the nation’s largest bank by market value, climbed 13 percent, capping the biggest increase since October 2008.
The FTSE/JSE Africa All Shares Index jumped 2.2 percent in Johannesburg as AngloGold Ashanti Ltd. and Harmony Gold Mining Co. gained at least 6.5 percent.
India’s S&P BSE Sensex climbed 3.4 percent to the highest level since November 2010. Yes Bank Ltd. jumped 22 percent, leading a measure of 13 lenders to a two-month high. Tata Steel Ltd. surged 7 percent. The rupee increased to the highest level in more than a month.
The Jakarta Composite Index rallied 4.7 percent to a one-month high, while the rupiah rose the most since May 2012. Benchmark stock gauges in Thailand, the Philippines and Malaysia added at least 1.2 percent. The ringgit rallied the most since September 1998.
The Hang Seng China Enterprises Index, also known as the H-share index, rose 1.7 percent. Li & Fung Ltd., a supplier of toys and clothes that gets most its revenue from the U.S., rose 2.6 percent. Zhaojin Mining Industry Co., China’s No. 2 gold producer, surged 12 percent.
The extra yield investors demand to own emerging market government dollar debt instead of U.S. Treasuries plunged 15 basis points, or 0.15 percentage point, to 319 basis points at 5:10 p.m. in New York, according to JPMorgan Chase & Co.
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