Emerging Stocks Rise on China as Stimulus Lifts Exporters
Emerging-market stocks rebounded from an 11-week low and currencies strengthened as China pledged to increase fiscal spending and investors speculated that exporters will get a boost from U.S. monetary stimulus.
Samsung Electronics Co. (005930), which got 62 percent of revenue from outside of South Korea in 2011, climbed to a one-week high. Chinese banks including China Minsheng Banking Corp. drove an advance in the CSI 300 Index. Brazil’s Bovespa index reversed gains as Diagnosticos da America SA, a Brazilian medical- diagnostics company, tumbled. The South Korean won rose the most in a month against the dollar.
The MSCI Emerging Markets Index advanced 0.8 percent to 1,049.94 in New York. China’s Finance Ministry said that it will boost fiscal spending by 10 percent this year as the country held its growth target at 7.5 percent. U.S. Federal Reserve Vice Chairman Janet Yellen said yesterday the central bank should press on with $85 billion in monthly bond buying. The Dow Jones Industrial Average jumped to a record.
“Yellen’s speech is boosting emerging markets today,” Michael Wang, an emerging-market strategist at Amiya Capital LLP in London, said by e-mail. The stimulus “keeps rates low and forces investors to seek risk,” he said.
MSCI’s emerging-markets gauge has declined 0.5 percent this year, compared with a 6.1 percent gain in the MSCI World Index (MXWO) of developed-country stocks. The measure of developing nations trades at 10.5 times projected 12-month earnings, compared with the MSCI World’s 14 times, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund jumped 1.2 percent to $43.42. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a gauge of options prices on the fund and expectations of price swings, dropped 6.8 percent to 17.63.
The Standard & Poor’s GSCI gauge of 24 raw materials advanced 0.9 percent, snapping a five-day decline, as aluminum, copper and zinc led metals higher.
Mexico’s IPC Index rose 0.3 percent, climbing for the first time in three days. Chemical maker Mexichem SAB (MEXCHEM*) surged 4.9 percent, the most since July 26, after Corporativo GBM SAB raised its rating on the stock to the equivalent of buy. Trading volume was more than triple the three-month average.
Brazil’s Bovespa index slid 1 percent, after rallying as much as 1.3 percent earlier today. Dasa fell the most since July after reporting its first loss since 2010. BRF Brasil Foods SA, the world’s biggest poultry exporter, gained 1.9 percent in Sao Paulo after earnings exceeded analysts’ estimates.
Venezuelan President Hugo Chavez died at 4:25 p.m. local time after a battle with cancer, Vice President Nicholas Maduro said. Five-year credit-default swaps on the nation’s debt rose 3 basis points after the announcement to 640 basis points, according to prices compiled by Bloomberg.
South Africa’s benchmark stock index gained 1.8 percent as mining companies advanced. ArcellorMittal South Africa Ltd. (ACL) rose 2.4 percent, and Impala Platinum Holdings Ltd. (IMP), the world’s second-biggest producer of the metal, added 3.8 percent
Russia’s Micex Index climbed 1.4 percent, gaining for the first time in four days as GMK Norilsk Nickel rose 3 percent. OAO LSR Group (LSRG), a Russian property developer, jumped 2.8 percent in London. The company recommended a 20 ruble-per-share dividend for 2012, the same level as the previous year.
Poland’s WIG20 Index added 1.6 percent, with KGHM Polska Miedz SA (KGH), the copper producer with the largest European mine output, advancing 2.1 percent.
Turkey’s ISE National 100 Index gained for a seventh day, the longest winning streak since Jan. 24, rising 0.5 percent. Tofas Turk Otomobil Fabrikasi AS (TOASO), the Turkish carmaker co-owned by Fiat SpA, climbed 3 percent to a record, after the company said it would pay 0.96 lira a share in gross dividends.
All 10 industry groups in the MSCI Emerging Markets Index rose as utility and technology companies had the biggest gains. Samsung, the world’s biggest maker of smartphones and televisions, climbed 0.7 percent in Seoul and Novatek Microelectronics Corp. (3034) advanced 4.4 percent in Taipei.
The CSI 300 Index (SHSZ300), representing China’s biggest companies in the Shanghai and Shenzhen stock exchanges, surged 3 percent. The Shanghai Composite Index (SHCOMP) gained 2.3 percent, snapping a two- day decline. Taiwan’s Taiex index added 0.8 percent.
“In the short term, China’s plan would be good for equities as it provides liquidity to markets,” Laurentia Amica Darmawan, who helps manage $530 million at PT First State Investment Indonesia, said in Jakarta. “Is it sustainable? I’m a bit doubtful about the impact for the medium term.”
Premier Wen Jiabao gave the targets in his final opening address to almost 3,000 lawmakers at the annual meeting of the National People’s Congress in Beijing.
Fiscal spending is targeted to rise 10 percent and revenue will grow 8 percent, excluding funds to be transferred from the stabilization fund, China’s Ministry of Finance said in a budget report presented to the National People’s Congress.
Minsheng Banking jumped 7.5 percent in Shanghai after slumping 6.8 percent yesterday. Ping An Bank Co. surged 10 percent in Shanghai to the highest level since December 2009.
China Resources Power Holdings Co., an energy producer that owns wind farms, rose 5.4 percent. China will step up efforts to cut emissions and improve energy efficiency this year, the National Development & Reform Commission said in a report today. The country plans to bolster domestic demand by boosting retail sales 15 percent this year, the commission said.
India’s S&P BSE Sensex Index advanced 1.4 percent, the biggest jump since Nov. 29.
The won strengthened 0.6 percent and the Czech koruna added 0.7 percent against the dollar, leading gains among 25 emerging market currencies tracked by Bloomberg.
The extra yield investors demand to hold emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 283 basis points, according to the JPMorgan Chase & Co.’s EMBI Global Index.
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