Emerging Stocks Rise as Easing Outlook Fuels Energy Gain
Emerging-market stocks advanced, paring a monthly decline in the benchmark index, as energy companies rose on speculation monetary stimulus from India to Europe and the U.S. will bolster economic growth.
Hindustan Unilever Ltd. (HUVR), the Indian unit of the world’s second-biggest consumer-goods company, and Brazilian oil producer Petroleo Brasileiro SA both climbed at least 5.5 percent as earnings beat estimates. Russian stocks fell as coal producer OAO Mechel (MTL) slumped in Moscow, while VTB Group jumped the most since February.
The MSCI Emerging Markets Index added 0.5 percent to 1,027.42 in New York, trimming its decline in April to 0.7 percent. The European Central Bank and India’s policy makers may cut interest rates this week, according to the majority of economists surveyed by Bloomberg. The U.S. Federal Reserve opens a two-day meeting tomorrow amid bets it will consider renewing its commitment to bond buying.
“Central bank accommodation and the perception that this will continue longer than people were worried about are supportive of markets today,” Michael Holland, who oversees more than $4 billion as chairman of Holland & Co., said in a phone interview in New York.
Nine out of 10 groups in the MSCI Emerging Markets Index rose as a measure of energy company stocks added 1 percent. The broad gauge has lost 2.6 percent this year, compared with a 9.7 percent increase in the MSCI World Index of developed-country stocks. The emerging-markets measure trades at 10.7 times 12- month projected profit, compared with the MSCI World’s 14.3 times, according to data compiled by Bloomberg.
Emerging stocks also gained as data showed that more Americans than forecast signed contracts in March to buy previously owned homes. The iShares MSCI Emerging Markets Index exchange-traded fund climbed 1 percent to $42.68. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, dropped 0.3 percent to 18.93.
Brazil’s Ibovespa advanced for the first time in three days as Petrobras, which has the biggest weighting on Brazil’s benchmark gauge, soared 5.5 percent. OGX Petroleo & Gas Participacoes SA, the oil producer controlled by Brazilian billionaire Eike Batista, surged 19 percent, posting the steepest jump on the emerging-markets gauge and paring this year’s loss to 51 percent.
The Mexican IPC index closed little changed as homebuilder Urbi Desarrollos Urbanos SAB plunged 12 percent to a record low.
Russia’s Micex Index dropped 0.7 percent, after jumping 2.5 percent last week. Mechel slid 0.8 percent. American depositary receipts of Russia’s biggest producer of steelmaking coal soared 7.1 percent in New York after the company signed a loan pact totaling $1 billion with OAO Gazprombank.
VTB Group gained 3.8 percent in Moscow. Yields on Russia’s ruble-denominated debt dropped to a record on speculation a proposal by the Finance Ministry to transfer windfall oil cash to the budget will curb the need to sell new bonds.
Indian stocks advanced 0.5 percent, with the benchmark S&P BSE India Index poised for its first increase in three months. Hindustan Unilever jumped 7 percent.
Most Hong Kong stocks fell as slower growth in industrial companies’ profits added to signs the world’s No. 2 economy is losing steam. The Hang Seng China Enterprises Index declined 0.5 percent. Mainland equity markets are closed through May 1 for public holidays.
Jiangxi Copper Co., the country’s biggest producer of the metal, fell 4.2 percent and China Coal Energy Co. (1898), the second- largest coal producer, slumped 6.2 percent after saying it expects a drop in first-half profit.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell three basis points, or 0.03 percentage point, to 284 basis points, according to JPMorgan’s EMBI Global Diversified Index.