Emerging Stocks Jump to Month High on China Prospects
Emerging-market stocks rose, driving the benchmark index to the strongest level in a month, on prospects the slowdown in the world’s second-largest economy has reached a bottom.
The MSCI Emerging Markets Index added 0.2 percent to 1,013.36 at the close of trading in New York, the highest close since Sept. 14. Sany Heavy Equipment International Holdings Co. (631) jumped after data showed Chinese industrial production accelerated last month. The yuan climbed beyond 6.25 per dollar for the first time in 19 years. Brazil’s Vale SA dropped after third-quarter iron-ore output fell. Russia’s OAO Gazprom, the world’s biggest natural-gas producer, declined.
Chinese Premier Wen Jiabao said the country’s economic growth has started to stabilize, a message underlined by data today showing the nation’s industrial output rebounded from a three-year low and retail sales surged the most in six months. Emerging stocks pared gains after a report showed U.S. jobless claims exceeded analysts’ estimates. The 21 countries in the MSCI index send about 13 percent of exports to the U.S. on average, according to the World Trade Organization.
“There is an improvement of the sentiment on China,” Martial Godet, head of strategy at BNP Paribas CIB in London, said by e-mail. “The long-awaited stabilization of the Chinese economy has finally arrived, with maybe even a mild pick-up.”
China’s Shanghai Composite Index (SHCOMP) rallied 1.2 percent, rising for a third day, the longest run of gains in more than a month. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong advanced 1.4 percent to the highest level since May. The BSE India Sensitive Index (SENSEX) added 1 percent.
Brazil’s Bovespa slid 0.6 percent and Russia’s Micex Index gained 0.1 percent. Turkey’s ISE National 100 Index retreated 0.5 percent, snapping a 10-day advance. Hungary’s BUX index fell 1.7 percent, extending yesterday’s 0.7 percent drop after the government backtracked on a promise to cut a special bank tax in half and said it plans to push ahead with a transaction levy.
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, slipped 0.3 percent. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 1.4 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell three basis points, or 0.03 percentage point, to 269, according to JPMorgan Chase & Co.’s EMBI Global Index.
French President Francois Hollande said efforts to stem the debt crisis may unravel if member states fail to deliver on their promises, as European Union leaders started a two-day meeting in Brussels. Hollande called on the euro area to introduce a banking union, provide economic help to countries that reduce budget deficits, and show investors that Greece can stay in the single currency if it abides by its commitments.
“Investors hope to see European Union leaders agree to new measures or at least a more unified approach to containing the crisis in the region,” Chris Weafer, Sberbank Investment Research chief strategist in Moscow, said in an e-mailed report.
Vale slipped 0.5 percent. OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, fell 5.9 percent to the lowest level since July 26 after saying it started reducing its exploratory drilling fleet. Online retailer B2W Cia Global do Varejo tumbled 8.5 percent after Amazon.com Inc. was said to be in talks to buy competitor Saraiva SA Livreiros Editores.
Gazprom slid 0.5 percent in Moscow and OAO GMK Norilsk Nickel, Russia’s largest producer of the metal, fell 1.1 percent.
U.S. jobless claims increased to 388,000 in the week ended Oct. 13, Labor Department figures showed today in Washington. The median forecast of 49 economists surveyed by Bloomberg called for a rise in claims to 365,000.
Gauges of industrial and telecommunication shares were the best performers among the 10 industry groups in the MSCI Emerging Markets Index (MXEF), rising by at least 0.8 percent. Health- care and utility stocks led declines. The broader measure has climbed 11 percent this year, trailing a 13 percent advance by the MSCI World Index (MXWO) of developed countries. The developing- markets gauge trades at 11.6 times estimated earnings, compared with the MSCI World’s multiple of 13.4, data compiled by Bloomberg show.
China’s Wen said the government is confident of achieving annual targets and the economy will continue to show “positive changes,” Xinhua News Agency reported, citing his comments in meetings he held with industry leaders, company executives and some local government officials on Oct. 12-15.
China’s industrial production rose 9.2 percent in September, rebounding from a three-year low of 8.9 percent expansion in August, today’s statistics bureau report showed.
Retail sales advanced 14.2 percent in September from a year earlier, the most since March, compared with the 13.2 percent median estimate. Fixed-asset investment excluding rural households rose 20.5 percent in the first three quarters, higher than the 20.2 percent median forecast in a survey.
The central bank raised its yuan fixing for a sixth day after U.S. Republican presidential candidate Mitt Romney reiterated he will label China a currency manipulator if he wins next month.
Sany Heavy, a construction-equipment maker, surged 9.2 percent in Hong Kong, the most in more than a year. Zoomlion Heavy Industry Science & Technology Co. climbed 6.6 percent, while China Shipping Development Co. rallied 5.5 percent.
EMC Instytut Medyczny SA (EMC) jumped 15 percent in Warsaw, the most since June 2007, after private-equity fund EQT Partners AB said it’s seeking to buy a stake in the health clinic chain.
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