Emerging Stocks Jump to Two-Week High as Commodities Gain
Emerging stocks rose to a two-week high, led by raw-material producers, as commodities jumped and South Korea’s economy grew the most in two years. Russia’s ruble had the biggest gain among currencies in developing nations.
Hyundai Motor Co. (005380) rose the most in a year in Seoul, while Brazil’s Vale SA (VALE5) jumped as earnings beat estimates. Cnooc Ltd. (883), China’s biggest offshore oil producer, added 2.9 percent in Hong Kong. South Africa’s Gold Fields (GFI) Ltd. surged 8.7 percent as the metal jumped. The iShares MSCI Emerging Markets Index (MXEF) exchange- traded fund capped the longest rally since December.
The MSCI Emerging Markets Index gained 0.9 percent to 1,027.30 in New York, the highest close since April 11. A gauge of raw-material shares of developing nations added 4.6 percent since touching the lowest since 2009 last week. The Standard & Poor’s GSCI index of 24 commodities rose 1.7 percent as copper and oil rose. South Korea’s economy grew a faster-than-estimated 0.9 percent last quarter.
“You’re seeing a stabilization in commodity prices because it was such a panic selloff,” Timothy Ghriskey, the chief investment officer at Solaris Group LLC in New York, which manages over $1.5 billion, said by phone. “The economic strength we’ve seen in Korea is certainly helping with the rebound in emerging-market equities.”
All 10 groups in the MSCI Emerging Markets Index rose as raw material shares surged 1.7 percent. The broad index has lost 2.6 percent this year, trailing a 9 percent increase in the MSCI World Index of developed-country stocks. The emerging-markets measure trades at 10.8 times 12-month projected profit, compared with the MSCI World’s valuation of 14.2, according to data compiled by Bloomberg.
Stocks also rose after data showed fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, pointing to an improving labor market. The iShares MSCI Emerging Markets Index ETF climbed 0.9 percent to $42.67 in a sixth day of gains. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, lost 1 percent to 18.61.
Brazil’s Ibovespa (IBOV) was little changed. Vale, the second- heaviest weighted stock on the equity gauge, jumped 1.4 percent. Mexico’s IPC Index gained 0.6 percent, as Corp. Geo SAB advanced 5.1 percent.
Russian stocks dropped, paring their biggest gain in seven months, led by financial shares. VTB Group declined 0.2 percent, while OAO Sberbank, Russia’s biggest lender, dropped 1.6 percent. Polish stocks were little changed, while the Czech Republic’s index fell. Hungarian shares rose a second day.
South Africa’s FTSE/JSE Africa All Share Index added 0.9 percent, advancing for a third day. Gold Fields surged the most since March 2009.
The Kospi Index added 0.8 percent in Seoul to the highest since April 4. Hyundai Motor, South Korea’s largest carmaker, reported first-quarter profit that exceeded analysts’ estimates, driven by record sales in China. The shares rose 5.7 percent.
China’s stocks fell, led by property and cement companies, on concern government measures to limit home-price gains will hurt profit. The Shanghai Composite Index lost 0.9 percent, while the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 1.3 percent. Cnooc rose to the highest price since April 3.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose one basis point, or 0.01 percentage point, to 294 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.