Emerging Stocks Jump Most in Two Months as China Boosts Demand
Emerging-market stocks rose the most in two months as speculation China may take more steps to boost economic growth increased demand for riskier assets.
The MSCI Emerging Markets Index (MXEF) added 1.4 percent to 921.71 at the close in New York, the biggest gain since March 13. The gauge rose for a fourth day for the longest winning streak this month, as OAO Severstal surged 7.3 percent to lift Russia’s Micex Index the most since Feb. 24. Brazil’s benchmark Bovespa fell, snapping a two-day advance.
China’s finance ministry said the promotion of energy efficient flat-panel televisions and energy-saving air conditioning is projected to stimulate consumption of more than 135 billion yuan ($21.3 billion), according to a statement from the ministry yesterday. Consumer confidence in the world’s biggest economy unexpectedly decreased in May to a four-month low while U.S. home prices in the 12 months through March fell at the slowest pace in more than a year.
“China’s stimulus is a supporting factor for commodity producers in the emerging markets,” Nick Chamie, head of global foreign-exchange strategy at Royal Bank of Canada, said in a telephone interview from Toronto today. “These announcements are getting the market excited.”
The MSCI gauge of 21 developing nations, up 0.6 percent this year, trades at 9.9 times estimated earnings, compared with 11.8 for the MSCI World Index of advanced nations, which has added 1.6 percent in 2012.
The S&P/Case-Shiller index of property values fell 2.6 percent from a year earlier after a 3.5 percent drop in February, data showed today in New York. The decline matched the median forecast of economists surveyed by Bloomberg News.
A confidence index among U.S. consumers decreased to 64.9 from a revised 68.7 in the prior month, figures from the New York-based Conference Board showed today.
As European leaders pressure Greece to meet bailout terms before elections next month, concern is growing that Spanish lenders will need more financial support to weather the crisis.
Brazil’s Bovespa declined 1 percent as PDG Realty SA Empreendimentos e Participacoes slid 11 percent in Sao Paulo, the most since November 2008.
Russia’s benchmark gauge jumped 2.8 percent, the most in three months. OAO Severstal, the nation’s second-largest steel producer, posted the biggest advance in the index after jumping the most since Oct. 24.
OAO Lukoil, Russia’s second-biggest oil producer, added 3.6 percent, the most since Feb. 24, on plans to list more than $1 billion of its existing shares in Hong Kong.
Hong Kong Listing
The company may hire China International Capital Corp. and Renaissance Capital for a Hong Kong listing within a year, Deputy Chief Executive Officer Leonid Fedun told reporters in Hong Kong today. The oil producer may later gain access to the Shanghai Stock Exchange (510230), subject to permission from the Chinese government, he said.
Akbank TAS (AKBNK), Turkey’s second-largest listed lender, snapped six days of losses in Istanbul, advancing 3.4 percent after MSCI said it was increasing the company’s weighting in its Global Standard Indices to 0.45 from 0.3.
Taiwan’s Taiex (TWSE) Index rose the most in five months after the official Central News Agency reported the ruling Kuomintang party is drafting rules which may allow investors to pay less tax on stock market gains.
The Taiex jumped 2.9 percent, the most among Asian benchmark indexes, and the biggest advance since Dec. 21. Hon Hai Precision Industry Co. (2317) climbed 4.8 percent.
The Philippine Stock Exchange Index (PCOMP) rose 1.4 percent to the highest close since May 14 after Moody’s Investors Service raised the nation’s sovereign rating outlook to positive from stable, citing the country’s improving debt levels. The nation’s long-term foreign-currency Ba2 rating is two levels below investment grade.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 406, according to JPMorgan Chase & Co.’s EMBI Global Index.