Emerging Stocks Rise to 3-Week High on Europe Speculation
Emerging-market stocks rose, driving the benchmark index to a three-week high, on optimism European Union policy makers will act to ease the region’s debt crisis.
The MSCI Emerging Markets Index (MXEF) climbed 0.8 percent to 948.97 by 5:10 p.m. in New York. Brazil’s Bovespa stock index rose 1.2 percent as steelmaker Usinas Siderurgicas de Minas Gerais SA surged after Goldman Sachs Group Inc. raised its rating. Samsung Electronics Co. (005930), the world’s largest maker of televisions and mobile phones, rose to an 11-week high in Seoul after Daewoo Securities Co. said the company’s profit will accelerate from the second quarter.
U.S. Treasury Secretary Timothy F. Geithner and German Finance Minister Wolfgang Schaeuble held talks in Germany today and backed a commitment by European leaders to do everything needed to defend the euro area while failing to mention its weakest link, Greece. Geithner was scheduled to meet European Central Bank President Mario Draghi later today. In the U.S., Federal Reserve policy makers convene this week before a jobs report to decide whether additional stimulus is needed.
“There’s a lot of optimism that euro officials are taking proper steps to help mitigate the problems,” said Dave Lutz, head of exchange-traded fund trading and strategy at Stifel Nicolaus & Co. “Also, there’s the possibility that central bankers would be coordinating more closely, which shows a higher resolve globally.”
The 21 countries in the MSCI gauge send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show.
EM ETF Declines
The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, fell for the first time in four days, losing 0.6 percent to $39.30. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, jumped 3.8 percent, the most in a week, to 26.22.
Brazil’s Bovespa Index rose after losing as much as 0.8 percent in early trading. Usiminas, as Usinas Siderurgicas is known, added 5.7 percent to 7.01 reais. The producer is Goldman’s new top pick within Latin American steel stocks, analysts led by Marcelo Aguiar in Sao Paulo wrote in a note to clients today.
The Micex Index advanced 1.6 percent in Moscow, its fourth consecutive gain. OAO Magnit, Russia’s largest food retailer by market value, climbed 3.5 percent while OAO Mechel, the country’s largest coal producer for steelmakers, jumped 6.6 percent.
South Africa, Korea
The FTSE/JSE Africa All Share Index (JALSH) rose 0.8 percent to an all-time high. Kumba Iron Ore Ltd. (KIO), Africa’s biggest producer of the mineral, gained 2.7 percent, while Anglo American Platinum Ltd., (AGL) the largest producer of the metal, rose 2.1 percent.
The rand depreciated 0.7 percent against the dollar and the ruble weakened by 0.4 percent.
South Korea’s Kospi Index (KOSPI) climbed 0.8 percent even after manufacturers’ confidence dropped to the lowest level in more than three years.
Samsung Electronics gained 3.4 percent. The company’s operating profit will be 7.5 trillion won ($6.6 billion) in the third quarter and 8 trillion won in the fourth quarter, Daewoo Securities said in a report today. Investors’ concerns about 2013 earnings appear to be premature, according to Shinyoung Securities Co., which said the share price is likely to rebound.
China Rongsheng (1101) Heavy Industries Group Holdings Ltd. and Glorious Property Holdings Ltd. slumped after the U.S. Securities and Exchange Commission filed a complaint accusing a company owned by the companies’ chairman Zhang Zhi Rong of insider trading.
China Rongsheng, the nation’s largest private shipbuilder, plunged 16 percent in Hong Kong, the steepest decline since it was listed in November 2010. Real estate developer Glorious Property (845) sank 11 percent, the most since October 2009.
Zhang, who founded both China Rongsheng and Glorious Property, wasn’t directly charged in the complaint by the SEC, which also obtained a court order freezing assets of traders it said were involved in the transactions.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose 1 basis point, or 0.01 percentage point, to 345, according to JPMorgan Chase & Co.’s EMBI Global Index.
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