Emerging Stocks Advance as Volatility Falls to Seven-Year Low
Emerging-market stocks rose for a sixth day and price swings in the benchmark index fell to the lowest level since 2005 on speculatation the Federal Reserve may extend measures to boost the world’s largest economy.
Celltrion Inc. (068270), a biopharmaceutical company, rose to the highest since Sept. 25 in Seoul after saying it plans to pay stock dividends. OAO GMK Norilsk Nickel, the world’s biggest producer of the metal, added the most in almost a week after RIA news service reported Billionaire Roman Abramovich may lift his Norilsk stake. E-Star Alternativ Nyrt. (ESTAR), a Hungarian energy supplier, fell the most in five years, heading for a record low as the Budapest Stock Exchange doubled the maximum trading ranage for the shares after the company filed for bankruptcy.
The MSCI Emerging Markets Index advanced 0.6 percent to 1,040.92 as of 10:07 a.m. in London, poised for the highest close since April 3 and its longest winning streak in three months. Ten-day volatility for the gauge fell to the lowest level since September 2005. The Fed will announce today $45 billion in monthly Treasury buying after a two-day meeting, a Bloomberg News survey of economists shows, while President Barack Obama is seeking a budget deal with Republican lawmakers to avert the so-called fiscal cliff.
“I’m very positive because what we have witnessed in the last few years is an incredible build up of money emanating from various central banks around the world,” Templeton Emerging Markets Group’s Mark Mobius, who oversees more than $40 billion, said in a phone interview from Nairobi today. “At the end of the day, it’s all about how much money is available in the system.”
The 21 countries in the emerging-markets index send about 17 percent of their exports to the U.S., according to data compiled by the World Trade Organization. If U.S. politicians resolve the “underlying fiscal issues” and growth in the world’s biggest economy recovers “towards the 3 percent level, then emerging equities would be among the main beneficiaries,” John-Paul Smith, an emerging markets strategist at Deutsche Bank AG in London, said in an emailed report dated Dec. 10.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries narrowed three basis points, or 0.03 percentage points, to 274 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rallied 1.5 percent, closing at the highest level since March 16. Thailand’s SET Index added 1 percent, the highest close since February 1996. South Korea’s benchmark Kospi index rose for a second day, and the won rose to the highest level since September, 2011.
“The market is expecting the Fed to be supportive and I guess it also expects a positive outcome of the fiscal cliff,” Gaelle Blanchard, emerging-markets strategist at Societe Generale SA in London, said by email. “The liquidity story is always good for risky assets.”
Romania’s leu strengthened 0.3 percent versus the euro, leading gains among emerging-market currencies tracked by Bloomberg. Prime Minister Victor Ponta, whose Social Liberal Union, or USL, won 67 percent of the 588 seats in Parliament, said yesterday it will seek to bolster its two-thirds majority with the aid of minority parties. The news eased uncertainy about the new cabinet ahead of Romania’s talks on an accord with the International Monetary Fund.
The MSCI’s emerging-markets gauge has risen 13.6 percent this year, beating the 12.6 percent gain by the MSCI World Index of developed countries. The developing-nations measure trades at 12 times estimated earnings, compared with the MSCI World’s multiple of 13.7, data compiled by Bloomberg show.
E-Star fell 20.6 percent in Budapest, heading for a record low. The stock has plunged 95 percent this year as the company failed to redeem bonds that matured in October and struggled to buy back the securities as well as bonds due 2014 and later. Hungary’s BUX Index allowed the shares to rise or fall by a maximum of 30 percent, compared with the earlier daily limit of 15 percent on either side, according to a statement from the exchange late yesterday.
Dana Gas PJSC (DANA) jumped 9.3 percent, the most since December 2009, its second day of gains on bets the United Arab Emirates fuel producer’s $920 million Islamic bond restructuring will spur profit growth.
Norilsk Nickel advanced 2 percent in Moscow, headed for its highest close since July 3. Billionaire Roman Abramovich may increase his Norilsk stake to 7.5 percent or as much as 10 percent, state-run RIA news agency reported late yesterday, citing an unidentified person with knowledge of discussions. John Mann, Abramovich’s spokesman, declined to comment when called by Bloomberg.
OAO RusHydro fell 1.3 percent, the most on the Micex Index and headed for its biggest drop in two weeks in Moscow, as board members of Russia’s largest hydropower company said they wanted to resign. “Several” board members have said they would like to step down, RusHydro’s spokesman Boris Zverev said by phone today, declining to specify the board members and their reasons for resigning.
The BSE India Sensitive Index (SENSEX) fell for a fourth day, even as government data showed the nation’s factory output in October beat estimates. India’s inflation accelerated last month, reinforcing the case for the central bank to hold off on an interest-rate cut next week. Sri Lanka’s Colombo All-Share Index rose 1.8 percent, the most since September 14, after the central bank unexpectedly lowered its policy interest rates for the first time since 2011 to spur economic growth.
Trading volumes for the Shanghai Composite Index were 21 percent above the 30-day average, 20 percent higher for Taiwan’s Taiex Index and 52 percent higher for Russia’s Micex Index.
Celltrion climbed 7.3 percent to the highest level since Sept. 25 in Seoul, after saying it will pay stock dividend of 0.148 share for every stock shareholders own.
Robinsons Land Corp. (RLC) rose 4.1 percent in Manila to a record. The Philippine Daily Inquirer said the developer is close to reaching an agreement with Japanese billionaire Kazuo Okada on a casino venture in Manila. Robinsons Land President Frederick Go and Vice Chairman Lance Gokongwei didn’t immediately respond to mobile-phone messages seeking comment on the report.
GCL-Poly Energy Holdings Ltd. (3800), a maker of solar-panel wafers, soared 11.2 percent in Hong Kong, leading gains on the MSCI Emerging Markets Index. (MXEF) China will allocate an additional 7 billion yuan ($1.1 billion) in solar subsidies, Xinhua News Agency reported.
LG Display Co. dropped 4.9 percent, the biggest loss since June 4, on speculation Apple Inc. may introduce an upgraded iPhone 5 version earlier than expected, potentially cutting the South Korean company’s shipments for the existing model.
PT Unilever Indonesia, a unit of the world’s second-biggest consumer goods company, sank 10.8 percent in Jakarta, the largest decline since June 2005. The company said in a statement today that total royalties to Unilever NV would increase to 5 percent of its revenue beginning next year. That compares with 3.5 percent now.
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