Emerging Stocks Gain Most Since January on Euro Stimulus Bets
Emerging-market stocks rallied the most since January on speculation European policy makers will help spur growth in the region, boosting the outlook for exporters in developing nations.
The MSCI Emerging Markets Index (MXEF) climbed 1.8 percent to 902.57 at the close in New York, the biggest jump since Jan. 17, as utility companies rose the most since November and energy companies rallied from an eight-month low. OAO MRSK Holding rose the most since 2009, lifting Russia’s Micex Index 1.2 percent. Brazil’s Bovespa added 3.2 percent on gains for MMX Mineracao e Metalicos SA.
European Central Bank President Mario Draghi said officials stand ready to act as the euro region’s growth outlook worsens. ECB officials meeting in Frankfurt today kept the benchmark interest rate at a record low of 1 percent, as predicted by 49 of 60 economists surveyed by Bloomberg News. Federal Reserve Bank of Atlanta President Dennis Lockhart said extending the central bank’s stimulus program that lengthen maturities of debt on its balance sheet was an option.
“There is a growing sense of hope that policy makers aren’t going to sit idly by and watch the euro zone spiral out of control and that helps demand for risky assets,” Neil Shearing, chief emerging market economist at Capital Economics Ltd., said by phone from London today. “The U.S. holding up relatively well still is good for some emerging economy export markets.”
The MSCI EM Utility Index climbed 2.6 percent, the most since Nov. 30, to lead advances for the 10 industry groups in the MSCI Emerging Market Index. Energy companies on the gauge added 2.5 percent, rising from an eight-month low.
The Standard & Poor’s GSCI Spot Index of 24 raw materials rose 1.3 percent to 593.06, the biggest advance since April 2, as oil for July delivery climbed 0.9 percent to settle at $85.02 a barrel on the New York Mercantile Exchange.
Stocks rose today amid speculation developing nations’ shipments to the U.S. and Europe will increase. The two account for 35 percent of China’s exports, according to Shenyin Wanguo Securities Co. The European Union took in 17.2 percent of Indian exports in the six months to September 2011, while the U.S. accounted for 11 percent, government data show.
Russia’s Micex Index advanced to the highest in a week as OAO MRSK Holding, a utility company in Moscow, jumped 9.4 percent, the most since September 2009. Federal Grid Co. added 8.5 percent, the biggest jump in five months.
MMX, an iron ore producer in Brazil, rose 8.2 percent, snapping a five-day decline in Sao Paulo.
Atlanta Fed President Lockhart said extending Operation Twist is an “option on the table.” Finance ministers and central bank governors from the world’s leading economies agreed to coordinate their response to the financial turmoil on a conference call yesterday. Officials said they would work together to help Spain and Greece put their public finances on a sustainable footing.
“The U.S. economy has shown signs of steady recovery, easing concern that its slowdown will worsen global growth,” Vattana Vongseenin, chief executive officer of Phillip Asset Management Co. in Bangkok, said by phone today. “Cooperation among leaders of major economies in Europe will be positive news because inaction would risk the spread of the debt crisis to other countries.”
Poland’s WIG20 Index rose 3.5 percent while the Budapest Stock Exchange added 3.3 percent. Turkey’s benchmark gauge rose 0.8 percent, rising for a fourth day, the longest winning streak since March 19.
South Africa’s benchmark FTSE/JSE Africa All Share Index increased 1.5 percent. Anglo American Plc (AAL), the diversified miner that makes up more than 7 percent of the index, advanced for a fourth day, adding 2.9 percent. The Jakarta Stock Exchange Composite Index added 3.3 percent, the most since Oct. 6.
The Hang Seng China Enterprises Index grew 0.4 percent as BYD Company Limited, a manufacturer and seller of automobiles, added 3.3 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 21 basis points, or 0.21 percentage point, to 401, according to JPMorgan Chase & Co.’s EMBI Global Index.