Emerging Stocks Climb to Six-Week High as Brazil Rallies
Emerging stocks rallied to a six- week high, led by consumer shares, as investors speculated central bank stimulus will boost demand for riskier assets. Brazil’s Ibovespa rose a second day as Embraer SA surged.
Hindustan Unilever Ltd. (HUVR) soared 17 percent in Mumbai as its parent said it will increase its stake in the company, while Hermes Microvision Inc. (3658), a Taiwanese maker of electronics parts, jumped to a record in Taipei as profit climbed. Russia’s Micex Index gained for the first time in four days as OAO Sberbank and VTB Group advanced. Planemaker Embraer added 6.6 percent in Sao Paulo after announcing a $840 million jet order.
The MSCI Emerging Markets Index rose 1.2 percent to 1,039.45, extending its monthly advance to 0.4 percent. Euro- area inflation slowed more than economists forecast, data showed, and most economists in a Bloomberg News survey predict the European Central Bank will cut interest rates this week. The U.S. Federal Reserve will consider renewing its commitment to bond buying at a two-day meeting that started today.
“It’s time for at least a bounce,” Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said by phone. “A lot of the weakness in emerging markets is certainly traced from Europe,” he said, adding that a rate cut by the ECB would be positive for developing nations.
All 10 groups in the MSCI Emerging Markets Index rose as a measure of consumer-staple stocks added 2 percent. The broad gauge has lost 1.5 percent this year, compared with a 10 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 14.4 times, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund gained 1.4 percent to $43.29, the highest level since March 12. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, lost 2.1 percent to 18.53.
The Ibovespa (IBOV) jumped 1.9 percent in Sao Paulo, paring its fourth monthly loss. Embraer rallied the most among the world’s largest airplane manufacturers after saying it will sell 30 regional jets for about $840 million to United Continental Holdings Inc. Mexico’s IPC Index gained 0.8 percent.
Russia’s Micex Index added 1.7 percent, paring a third monthly drop, as OAO Sberbank and VTB Group advanced at least 4.5 percent. Benchmark gauges in Turkey and Poland rose, while Hungarian shares jumped 2 percent in the biggest advance among major emerging-market indexes.
India’s S&P BSE Sensex (SENSEX) rose, completing the biggest monthly advance since November. Hindustan Unilever jumped to a record after the world’s second-largest consumer goods producer said it will spend up to $5.4 billion to boost its stake in the local unit to 75 percent.
The Hang Seng China Enterprises Index added 1.2 percent in Hong Kong as Aluminum Corp. of China Ltd., the nation’s No. 1 supplier of the light metal by market value, increased 1.7 percent. Mainland equity markets are closed through May 1 for public holidays. Korea’s Kospi (KOSPI) Index rose for the first time in three days. Taiwan’s Taiex Index advanced 0.8 percent. Hermes surged 6.7 percent after first-quarter net income jumped 93 percent from a year earlier.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped three basis points, or 0.03 percentage point, to 282 basis points, according to JPMorgan’s EMBI Global Diversified Index.