Emerging Stocks Rise, Snapping 2-Day Drop on BOJ Stimulus
Emerging-market stocks rose for the first time in three days as an unexpected increase in Japan’s asset-purchase program boosted metals and fueled speculation that central banks will revive global growth.
The MSCI Emerging Markets Index (MXEF) advanced 0.3 percent to 1,009.44 by 4:54 p.m. in New York. Mexico’s IPC index climbed to the highest in six weeks, with homebuilder Urbi Desarrollos Urbanos SAB (URBI*) and Desarrolladora Homex SAB (HOMEX*) leading gains. China’s Zijin Mining Group Co. (2899) and Poland’s KGHM Polska Miedz SA (KGH) rose as copper and gold prices increased. Lonmin Plc (LON) climbed in Johannesburg after signing a wage agreement that ended a six- week strike.
The Bank of Japan increased its asset-buying fund by 10 trillion yen ($128 billion), following new debt-purchase plans by the U.S. Federal Reserve and the European Central Bank this month. An MSCI Inc. gauge of raw-materials stocks in developing nations jumped to the highest level since May, while a report in the U.S. showed sales of existing homes rose more than estimated.
“What we are seeing is a liquidity driven rally that has supported risky assets,” Kieran Curtis, an emerging markets bond fund manager at Aviva Investors Ltd., said by phone from London. “The BOJ’s move adds to the view that central banks are going to do what they can to support the markets.”
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, was little changed. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, added 0.1 percent.
Mexico IPC index (MEXBOL) advanced 0.9 percent as Urbi Desarrollos climbed 5.5 percent and Homex added 3.6 percent.
Brazil’s Bovespa (IBOV) index declined 0.2 percent after reaching the highest valuation in almost three years on speculation recent gains may have been excessive and concern inflation may curb the country’s economic recovery.
Localiza Rent a Car SA, Latin America’s biggest car-rental company, was the biggest loser on the gauge after Morgan Stanley lowered its recommendation to the equivalent of sell.
The extra yield investors demand to own emerging-market dollar bonds over U.S. Treasuries increased 4 basis points, or 0.04 percentage point, to 294, according to JPMorgan’s EMBI Global Index.
Copper climbed 0.7 percent in New York, while gold increased 0.1 percent.
Zijin Mining, China’s biggest gold producer, increased 5.6 percent to a six-month high and KGHM, Poland’s sole copper producer, gained 1.7 percent, set for the highest close since November 2011.
Lonmin rose 1.5 percent, advancing to a one-month high, as miners agreed to return to Marikana, the mine that produces almost a 10th of global platinum output. Pay grievances triggered a violent strike last month and halted work at Marikana, which accounts for about 96 percent of Lonmin’s output. Police shot 34 protesters on Aug. 16 in the worst mine violence since apartheid ended in 1994.
The Shanghai Composite rallied for the first time in three days. China will push for 15 major capital market reforms, including development of the futures market, during the current five-year plan, Shanghai Securities News reported.
China’s Vice President Xi Jinping, in line to become the country’s next president, met with U.S. Defense Secretary Leon Panetta at the Great Hall of the People in Beijing today, his first announced appearance with a foreign visitor after being absent in public for about two weeks.
Sberbank, Russia’s biggest lender, declined 1.1 percent. The central bank raised 159.3 billion rubles ($5.1 billion) selling a minority stake yesterday.
Longfor Properties Co. slumped 8.7 percent, the biggest drop in 11 months. The Chinese developer said it plans to raise HK$3.07 billion ($396 million) selling shares.
Astro Malaysia Holdings Bhd., the country’s largest pay-TV broadcaster, is seeking to raise as much as 4.6 billion ringgit ($1.5 billion) in the world’s sixth-biggest corporate initial public offering this year, according to three people with knowledge of the matter. The FTSE Bursa Malaysia KLCI Index (VXEEM) climbed 0.4 percent today to the highest level in two weeks.
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