Emerging Stocks Rise on Cyprus as Brazilian Equities Drop
Emerging-market stocks advanced for the first time in three days after Cyprus avoided a disorderly default by agreeing on the outline of a bailout. Brazilian equities dropped to an eight-month low.
Greentown China Holdings Ltd., a Hong Kong-based property developer, gained the most on the MSCI Emerging Markets Index as profit surged. OAO Rosneft, Russia’s biggest oil producer, climbed after securing Chinese oil deals. Brazil’s Bovespa (IBOV) index dropped a fifth day as Cia. Hering led losses by companies linked to domestic demand. Hungary’s forint weakened on speculation the central bank will cut the benchmark rate.
The MSCI emerging-markets stock gauge rose 0.7 percent to 1,022.27 in New York. Cyprus agreed on an accord with creditors, paving the way for 10 billion euros ($13 billion) of emergency loans to stave off the threat of default.
The agreement “is positive in terms of risk sentiment,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London, said by e-mail. “It prevents a disorderly default in Cyprus and exit from the euro.”
Cyprus agreed to the outlines of an aid deal that imposes losses which two European Union officials said would be as much as 40 percent on uninsured depositors at Bank of Cyprus Plc, which will take over the viable assets of Cyprus Popular Bank Pcl as that bank is wound down.
Technology and industrial shares in the MSCI Emerging Markets Index rose the most among 10 groups. The broader gauge has lost 3.1 percent this year, compared with a 6.6 percent jump in the MSCI World Index (MXWO) of developed-country stocks. The developing-nations measure trades at 10.8 times estimated 12- month earnings, compared with the MSCI World’s multiple of 14.1, data compiled by Bloomberg show.
The iShares MSCI Emerging Markets exchange-traded fund, the ETF tracking developing-nation shares, fell 0.1 percent to $41.92. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slid 2 percent to 18.69.
The Bovespa dropped 0.7 percent as Hering lost 3.1 percent in Sao Paulo. The real traded weaker than 2 per dollar for a third day on speculation the central bank won’t intervene to strengthen the currency after analysts lowered their forecasts for economic growth.
Russian equities dropped to the lowest level in more than three months as Bank of America Merrill Lynch cut its recommendation for the nation’s shares, calling the it a “net loser” in the Cyprus bailout. The Micex Index erased earlier gains, falling 0.9 percent.
OAO Rosneft jumped 1.5 percent in Moscow. Under agreements signed during President Xi Jinping’s first state trip abroad, China may double oil imports from state-run Rosneft to more than 620,000 barrels a day, challenging Germany as the biggest buyer of Russian crude. The two also plan to sign an agreement this year to build a pipeline to ship Russian gas to China.
Hungary’s BUX Index (BUX) lost 0.6 percent, reversing earlier gains. The Magyar Nemzeti Bank will cut the two-week deposit rate by a quarter-point to 5 percent tomorrow, according to economists in a Bloomberg survey.
Thai stocks snapped a five-day drop after Credit Suisse Group AG and Morgan Stanley recommended investors buy the nation’s shares following the biggest weekly slump since the peak of the 2008 global financial crisis. The benchmark SET Index jumped 3 percent, the steepest increase since October 2011 and the biggest gain in Asia.
Greentown China Holdings surged 10 percent, leading gains in Honk Kong. China Petroleum & Chemical Corp., Asia’s biggest refiner, climbed 2.7 percent after posting full-year profit that beat estimates. The Hang Seng Index gained 0.6 percent to 22,251.15 at the close in Hong Kong.
The S&P BSE Sensex index lost 0.3 percent in Mumbai after a party that supports Prime Minister Manmohan Singh’s coalition government said it will prefer elections in October, spurring concerns polls may be held before schedule. State Bank of India (SBIN), the nation’s biggest lender, slid 1.2 percent.
The extra yield investors demand to own developing-nation dollar debt over U.S. Treasuries fell two basis points, or 0.02 percentage point, to 298, according to the JPMorgan Chase & Co. EMBI Global Index.
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