Emerging Stocks Rise Most in Two Weeks Amid U.S. Spending
Emerging-market stocks rose the most in two weeks as President Barack Obama’s proposed spending on infrastructure and environmental programs bolstered the outlook for the world’s largest economy.
Energy stocks led the gains in the MSCI Emerging Markets Index, climbing 1.1 percent and pushing Russia’s Micex Index to the biggest advance since Jan. 8. Hyundai Motor Co. and Kia Motors Corp. rose at least 2.4 percent in Seoul. America Movil SAB, the mobile-phone company controlled by billionaire Carlos Slim, tumbled 10 percent as profit missed estimates on increased competition. The Bovespa Index fell as trading in Brazil resumed after the the 2 1/2-day Carnival holiday.
The MSCI Emerging Markets Index added 0.6 percent to 1,064.88 in New York, the biggest jump since Jan. 29. Obama pledged to expand trade with Europe in the State of the Union speech late yesterday. He also proposed spending $50 billion on “urgent” infrastructure projects.
“It’s encouraging to see the U.S. president talking about spending,” Alan Gayle, senior strategist at RidgeWorth Capital Management, said in a phone interview from Richmond, Virginia. His firm oversees about $47 billion, including emerging market stocks. “It tells me the world’s largest economy is healing. That bodes well for global growth.”
The iShares MSCI Emerging Markets exchange-traded fund rose for a second day in New York, adding 0.5 percent to $44.17, the highest since Feb. 1. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, declined 4.7 percent to 15.84.
The emerging-markets index’s 100-day volatility was at 8.5, a record low, according to data compiled by Bloomberg dating back to 2003.
Russia’s Micex gauge climbed 1.7 percent in its first gain in six days. OAO LSR Group, a Russian developer, rose 3.1 percent in Moscow, snapping a five-day losing streak. Demand for new primary housing in the Moscow and St. Petersburg regions is set to be sustained, Goldman Sachs Group Inc. said in an e- mailed note dated yesterday.
OAO Alrosa, a Russian diamond miner, jumped 4.1 percent. Russia has started seeking companies to organize the sale of shares in Alrosa held by the state, according to the Federal Property Management Agency.
Synthos SA, a Polish chemical producer, rose 2.4 percent in Warsaw. The management board recommended a payout of at least 661.6 million zloty ($213.1 million), exceeding its estimate of 2012 net income at 585 million zloty, according to a statement yesterday.
PT Bumi Resources Tbk, a Jakarta-based coal producer, jumped to the highest level since October, leading gains in the MSCI Emerging Markets Energy Index. Bakrie Group moved closer to separating the company from Bumi Plc.
South Korea’s Kospi Index rebounded 1.6 percent after falling 0.3 percent yesterday when North Korea conducted its third nuclear test. South Korea’s currency and stocks have historically been resilient to nuclear tests by its northern neighbor, according to data compiled by Bloomberg.
The won strengthened 2.4 percent April 6, 2009, the first trading day after a long-range rocket was fired, and the benchmark equity index advanced 1.1 percent. Seven weeks later, when the communist regime announced a nuclear test, initial declines were recouped within a week.
“Previous nuclear tests by the North had a short-term impact on markets, with a quick recovery in the following days,” Kim Chul Jung, a Seoul-based strategist at Korea Investment & Securities Co., said by phone yesterday. “This time around, the impact appears to be even more marginal due to North Korea’s repeated signals about an upcoming test.”
Hyundai Motor gained 2.4 percent, closing at the highest level since Jan. 23, while Kia Motors advanced 3.9 percent. Samsung Electronics Co., the world’s biggest maker of mobile phones, rose for a third day to the highest level since Jan. 16.
The BSE India Sensitive Index, or Sensex, advanced 0.2 percent, gaining for a second day.
United Breweries Holdings Ltd., which owns stakes in Vijay Mallya’s six companies, lost 9.7 percent. Indian lenders to grounded carrier Kingfisher Airlines Ltd. will start the process of recovering as much as 85 billion rupees ($1.6 billion) of dues after owner Mallya failed to repay debt, Shyamal Acharya, deputy managing director of State Bank of India, said in an interview to Bloomberg TV India today.
Mexico’s IPC index dropped 1.7 percent, the most since June. America Movil slumped 10 percent as slower economic growth hurt voice revenue in the fourth quarter and in January.
Brazil’s Bovespa index fell 0.2 percent as economists surveyed by the central bank raised their 2013 inflation forecasts for a sixth week. Billionaire Eike Batista’s logistics unit LLX Logistica SA slumped after a contract to lease space in Acu port was canceled.
Melco Crown Entertainment Ltd., the casino venture of billionaire James Packer and Lawrence Ho, rallied 2.1 percent in New York after data showing Macau casinos received record visitors this week. Trina Solar Ltd. led declines in solar stocks, tumbling 5.8 percent.
Markets in China and Taiwan are shut this week for the Lunar New Year holidays, while those in Hong Kong will be closed from Feb. 11 through Feb. 13.
Turkey’s ISE National 100 Index fell 0.2 percent and the lira strengthened 0.5 percent versus the dollar. The country’s current-account deficit narrowed to about 6 percent of gross domestic product last year as a government report showed the gap at $4.66 billion in December, less than analysts estimated.
The Philippine Stock Exchange Index climbed 1.1 percent to a record. Philippines central bank Deputy Governor Diwa Guinigundo said today the nation can win its first investment- grade credit rating this year. Moody’s Investors Service, Fitch Rating and Standard & Poor’s grade the nation’s debt at the highest junk level. The country’s economy will grow 6 percent to 7 percent this year and accelerate further in 2014, Economic Planning Secretary Arsenio Balisacan said today.
Thailand’s SET index snapped six days of losses to close at the highest level since 1994.
While the MSCI Emerging Markets Index is trading 0.9 percent above its closing level at the end of 2012, the gauge has fallen 1.6 percent from a 17-month high reached on Jan. 3 as 61 percent of its companies that have reported quarterly profit missed analysts’ estimates. That’s almost twice the rate for the MSCI World Index of developed nations, according to data compiled by Bloomberg.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries slipped five basis points, or 0.05 percentage points, to 269 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.