Emerging-Market Stocks End Three-Day Drop as Commodities Rally

Updated on
  • Metal producers surge on report China to probe short-selling
  • Turkish stocks retreat amid continued tension with Russia

Emerging-market stocks gained for the first time this week, led by technology companies and raw-material producers, as commodity prices extended a rebound.

The MSCI Emerging Markets Index climbed 0.2 percent as of 7:50 p.m. in Sao Paulo as a rally in metal prices boosted the outlook for miners and steelmakers. Aluminum Corp. of China rose and Brazilian iron-ore producer Vale SA rebounded from a 11-year low. Naspers Ltd. rallied in Johannesburg on a report it’s planning to expand its video-streaming service. Turkish stocks and the lira retreated amid continued tension over the downing of a Russian war jet.

The revival in industrial-metal prices followed a report that Chinese regulators are considering a probe into short-selling on local exchanges. Metals have slumped in 2015, with copper plunging to a six-year low, on concern the worst economic slowdown in a quarter of a century in China will curb demand.

"Any short-selling ban will only have a transitory effect because the real issue remains the supply-demand imbalance in the global metal and mining space," said Joseph Dayan, head of markets at BCS Financial Group in London. "Investors are pricing out some of the geopolitical risk as the Turkish-Russian fallout looks to be somewhat contained."

Trade Retaliation

The Borsa Istanbul 100 Index retreated 2.4 percent and the lira weakened 1.3 percent as Russia’s agriculture ministry said products from Turkey will be subjected to additional border checks and laboratory controls. Russian stocks swung between gains and losses and the ruble depreciated 0.5 percent.

The MSCI EM Information Technology Index rose 1 percent to a three-week high, the most among 10 emerging-market industry groups. Samsung Electronics Co. added 2.8 percent, the biggest increase this month, amid expectations the company will raise its dividend payouts under pressure from the government and shareholders.

Naspers, Africa’s biggest company by market value, jumped 1.1 percent on a report it is planning to expand its video-streaming competitor to Netflix Inc. into three new continents next year. Samsung has agreed to include the service on its smart TVs, according to a person familiar with the matter.

Indian Lawmaking

India’s S&P BSE Sensex climbed for the first time in three days as a parliamentary session opened. Prime Minister Narendra Modi, who has a month in parliament to get his economic policy back on track after a string of setbacks, faces a key test as he tries to push through a goods-and-services tax bill that’s seen as a bellwether for progress after being repeatedly blocked by opponents.

The MSCI Emerging Markets Index has dropped 12 percent this year and trades at 11.2 times projected 12-month earnings. That’s 30 percent cheaper than advanced-nation shares.

A Bloomberg gauge of emerging-market currencies fell 0.3 percent, declining for a second day, amid a 1.1 percent retreat in South Africa’s rand. India’s rupee dropped 0.4 percent.

The premium investors demand to hold emerging-market debt rather than U.S. Treasuries narrowed three basis points to 381, according to JPMorgan Chase & Co. indexes.

(An earlier version of this story was corrected to say the Micex index didn’t erase but only trimmed its Tuesday losses.)

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