Emerging Stocks Advance as Brazil Jumps to Two-Week High
Emerging stocks rose a second day, led by consumer discretionary shares, as investors weighed central bank comments on stimulus and China’s imports grew. Brazilian equities capped their longest rally since October.
GCL-Poly (3800) Energy Holdings Ltd. surged 9.5 percent in Hong Kong after a profit forecast from First Solar Inc. (FSLR) beat expectations. OAO Mechel climbed 4.6 percent in New York as Chief Financial Officer Stanislav Ploschenko said Russia’s largest coking coal producer may agree on as much as $2 billion in financing from banks by mid-May. Brazil’s Bovespa index rose a fourth day as port developer LLX Logistica SA, rallied.
The MSCI Emerging Markets Index (MXEF) added 0.8 percent to 1,024.49 in New York. Imports to China rose 14.1 percent in March from the year earlier. U.S. Federal Reserve minutes showed several members saw quantitative easing ending by year end. Bank of Japan Governor Haruhiko Kurodasaid that while policy makers will monitor if further stimulus is needed, steps taken last week are sufficient to achieve the 2 percent inflation goal.
“When the Fed shows signs it’s going to stop easing, that’s a good thing for the markets,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $325 billion of assets. “It might improve confidence.”
All 10 groups in the MSCI Emerging Markets Index rose as consumer discretionary shares added 1.3 percent. The broader index has lost 2.9 percent this year, compared with a 8.5 percent gain in the MSCI World Index of developed-country stocks. The developing-nations measure trades at 10.7 times estimated 12-month earnings, compared with the MSCI World’s multiple of 14, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund rose 1 percent to $42.50. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a gauge of options prices on the fund and expectations of price swings, slid 1.9 percent to 17.67.
Brazil’s Bovespa (IBOV) rose 0.5 percent to the highest since March 28 after a report showed Brazil’s inflation slowed more than forecast in March, easing concern that rising prices will hurt the recovery in Latin America’s largest economy. LLX gained 9.7 percent.
Russian shares erased earlier gains as consumer stocks declined. Mechel rose the most in the Bloomberg Russia-US Equity Index of the most-traded Russian companies in New York. The company expects to agree on a loan of more than $1 billion from Vnesheconombank for Elga, Chief Financial Officer Stanislav Ploschenko said in an interview in New York today.
Hong Kong stocks rose as speculation of Chinese government support measures offset concerns about slowing growth in the nation’s economy. The Hang Seng China Enterprises Index added 0.8 percent. GCL-Poly, the world’s biggest producer of polysilicon, rose the most since Feb. 14.
Indian equities climbed, with the benchmark index rebounding from a seven-month low, after some investors judged recent declines excessive. The S&P BSE Sensex jumped 1 percent. Reliance Communications Ltd. surged 13 percent, the most in the emerging-markets gauge.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped four basis points, or 0.04 percentage point, to 282 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
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