Emerging Stocks Post Longest Rally in 14 Months After China Data
Emerging-market stocks rose for a ninth day, the longest stretch of gains in more than 14 months, as data showing expansion in Chinese service industries and U.S. consumer sentiment bolstered confidence in the global economy.
China International Marine Containers Group Co. Ltd. (2039), the world’s biggest container maker, surged 15 percent, while Shimao Property Holdings Ltd. (813) jumped the most in 13 months in Hong Kong as financial companies led gains on the MSCI Emerging Markets Index. Banco Bradesco SA (BBDC4) climbed to a record in Sao Paulo as Brazil’s Bovespa (IBOV) Index entered a bull market. Hyundai Motor Co. (005380) fell in Seoul on bets a stronger won may weigh on profits.
The developing-nations gauge added 0.4 percent to 1,082.68 in New York after rising to a 10-month high yesterday and entering a bull market. China’s services industries grew at the fastest pace in four months in December, boosting prospects the nation’s CSI 300 Index will also rally to a bull market when it resumes trading tomorrow. In the U.S., improving consumer sentiment and data showing companies added more workers than projected signaled the world’s largest economy picked up.
“There’s been an incredible turnaround in China sentiment and this data helps that,” John-Paul Smith, an emerging market strategist at Deutsche Bank AG, said by phone from London today. “People’s confidence toward the Chinese economy is almost as high as its ever been.”
The MSCI Emerging Markets Index has risen 23 percent from a June 4 low. A bull market is defined by a rally of 20 percent or more from a low.
“Economic indicators in China and the U.S. are raising optimism that the global economy is on a steady path of recovery,” said Budsares Yunniyom, a fund manager at Asset Plus Fund Management Co. in Bangkok, which oversees about $800 million of assets. “That may support further gains in emerging- market equities as most investors are willing to raise holdings in risky assets.”
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, fell 0.7 percent to $44.90. The Vanguard MSCI Emerging Markets ETF (VWO) slid 0.6 percent to $45.20. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, dropped 4.9 percent to 18.78, a record low.
Brazil’s Bovespa climbed 1.2 percent, extending its advance to 21 percent from a June 5 bear market low. Banco Bradesco, Brazil’s second-biggest bank by market value, jumped 5.9 percent, leading gains in Sao Paulo.
Petrobras, as state-owned oil producer Petroleo Brasileiro SA (PETR4) is known, climbed 3.6 percent after confirming “high potential of oil flow” at a Carcara well and declaring that two areas in Brazil’s Campos Basin have traces of good-quality oil.
The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong rose 0.8 percent to its highest level since August 2011. The BSE India Sensitive Index climbed 0.3 percent to the highest level in two years. Markets in Shanghai and Moscow were closed today.
The Jakarta Composite Index rose 1.2 percent to a record high led by food exporter and importer PT Cahaya Kalbar Tbk (CEKA) with a 25 percent gain. The Philippine Stock Exchange Index (PCOMP) rallied 1.2 percent, the biggest advance among Asian benchmark gauges. South Korea’s Kospi index dropped 0.6 percent.
The Czech PX Index slipped 0.3 percent, the first decline in three days. Turkey’s ISE National 100 Index rose 0.5 percent and Dubai’s DFM General Index (DFMGI) added 0.9 percent.
The Philippine peso reached its strongest level since March 2008 against the U.S. currency and Taiwan’s dollar rose to the highest level since Nov. 12. The Polish zloty fell 0.7 percent versus the euro, leading declines in emerging markets, after the government failed to sell the maximum amount of bonds offered at an auction today.
The MSCI Emerging Markets Financials Index rose 0.9 percent, making it the best performer among 10 industry groups, while utility shares lost 0.1 percent. The broader emerging markets index has climbed 7.4 percent in the past month, outpacing a 3.8 percent increase by the MSCI World Index. (MXWO) The emerging-markets index trades at 11 times estimated earnings, compared with the MSCI World’s multiple of 13.1, according to data compiled by Bloomberg.
China’s non-manufacturing purchasing managers’ index rose to 56.1 in December from 55.6 in November, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today. A reading above 50 indicates expansion.
Shimao Property, a developer that gets all its revenue from China, surged 9.6 percent in Hong Kong to lead gains among financial companies. The company’s contract sales in December jumped 70 percent from a year earlier. Ruentex Development Co. Ltd. (9945) climbed 6.9 percent to a record in Taipei. The company has stakes in China’s largest hypermarket operator.
China International Marine Containers rallied for a fifth day, surging 15 percent to a record high as industrials companies gained 0.5 percent.
OCI Co. Ltd. (010060), South Korea’s biggest maker of polysilicon used in solar panels, jumped 6.9 percent in Seoul, its third day of gains. Prices of polysilicon climbed to $15.38 per kilo, its first weekly increase in 11 months, from $15.35, SK Securities Co. said in a report today, citing data from research firm PV Insights. GCL-Poly Energy Holdings Ltd. (3800), a maker of solar-panel wafers, surged 6.7 percent in Hong Kong.
Hyundai Motor, South Korea’s biggest automaker, fell 4.6 percent in Seoul, the most in two months on speculation a stronger won may weigh on profits. The Korean won strengthened to a 16-month high today, and a stronger currency hurts exporters because it cuts the value of repatriated earnings. Hyundai Glovis Co. Ltd., the logistics unit of Hyundai Motor Group, was the worst performer on the emerging markets gauge, falling 6.6 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries narrowed 10 basis points, or 0.1 percentage point, to 244, according to JPMorgan Chase & Co.’s EMBI Global Index.
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