Emerging Stocks Rise on Bernanke Comments as Rand, Lira Rebound
Emerging-market stocks rose for a seventh day, led by gains in Mexico, Russia and Turkey, after comments by Federal Reserve Chairman Ben S. Bernanke alleviated concern that the central bank will curtail its stimulus program.
The MSCI Emerging Markets Index advanced 0.7 percent to 959.37, in the longest run of gains in six months. Bernanke said asset purchases weren’t on a “preset course” and could be reduced more quickly or expanded as economic conditions warrant. South Africa’s rand and Turkey’s lira reversed earlier losses. India failed to sell treasury bills at a weekly auction after the central bank tightened policy for the first time since 2011.
“Markets all over the world are reacting positively to Bernanke’s words today because he was quite consistent with what the Fed has said lately, that changes to the stimulus policy will be gradual,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro. “That’s very good for emerging countries, which will be able to smoothly adjust their economies to the new reality using their own internal tools.”
OAO Gazprom, Russia’s natural gas export monopoly, rose the most since October 2011 in a fifth day of advances. Consumer-health products manufacturer Hypermarcas SA gained the most since May in Sao Paulo as the Ibovespa climbed 1.1 percent. Anhui Conch Cement Co. (914), China’s largest cement maker, jumped to a five-week high in Hong Kong after the nation’s foreign direct investment surged 20 percent in June. OTP Bank Nyrt., Hungary’s biggest lender, slumped the most since March.
The lira gained for a third day, adding 0.5 percent against the dollar. The rand advanced 0.3 percent. Mexico’s peso and the Brazilian real climbed the most among 24 emerging-market currencies.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 322 basis points, according to JPMorgan Chase & Co.
“If the outlook for employment were to become relatively less favorable, if inflation did not appear to be moving back toward 2 percent, or if financial conditions -- which have tightened recently -- were judged to be insufficiently accommodative to allow us to attain our mandated objectives, the current pace of purchases could be maintained for longer,” Bernanke said today in prepared testimony.
Gauges of healthcare, energy and material stocks in the MSCI Emerging Markets Index rose at least 0.9 percent, leading gains among the 10 industry groups.
Russia’s Micex Index climbed 1.5 percent, its fifth day of advances in the longest winning streak since a six-day rally ended Dec. 12. Gazprom added 5.2 percent.
Mexico’s IPC Index gained 1.5 percent as Grupo Financiero Banorte SAB, the nation’s third-largest bank, rallied 11 percent after selling about $2.5 billion of shares in the country’s biggest equity sale of the year.
South Africa’s FTSE/JSE Africa All Shares Index advanced 1.4 percent. Kumba Iron Ore Ltd. gained 4.1 percent and BHP Billiton Ltd., the world’s biggest mining company, climbed 3 percent in Johannesburg, after saying fourth-quarter iron ore production increased 17 percent as the company expands operations in Australia.
Hungary’s BUX Index retreated 1.5 percent, its first drop in four days, as OTP Bank lost 3.6 percent. Prime Minister Viktor Orban’s cabinet is looking at the possibility of retroactively modifying the conditions of foreign-currency loans later this year, Deputy Prime Minister Tibor Navracsics said in a HirTV interview late yesterday.
Poland’s WIG 20 Index added 0.3 percent and the Czech Republic’s PX Index fell 0.2 percent on a third day of drops.
The MSCI Emerging Markets Index has retreated 9.1 percent this year and trades at about 10 times its 12-month projected earnings. The MSCI World Index of developed nations has gained 12 percent in 2013 and trades at 13.8 times.
The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong advanced 0.7 percent as Anhui Conch surged 6.1 percent. Foreign direct investment in China rose to a record $14.39 billion last month, according to the Ministry of Commerce. The 20 percent growth compared with the estimate of a 0.7 percent gain in a Bloomberg survey.
China will keep economic growth, employment and inflation within limits and avoid “wide fluctuations,” Chinese Premier Li Keqiang told a forum of advisers and executives yesterday, according to a summary published on a state website.
The Reserve Bank of India rejected bids worth 293 billion rupees ($4.9 billion) received for a combined 120 billion rupees of 91- and 182-day notes offered, it said in an e-mailed statement. The failure of the bill sale follows an offering of bonds yesterday by state governments, where the borrowers met only 26 percent of an 86 billion rupee target.
The S&P BSE Sensex (SENSEX) Index of Indian stocks advanced 0.5 percent, led by a 9.9 percent gain by Hindustan Unilever Ltd. to a record. South Korea’s Kospi (KOSPI) index advanced 1.1 percent, while the Jakarta Composite Index added 0.8 percent and Thailand’s SET index climbed 0.5 percent.
Apple Inc. suppliers including Pegatron Corp. (4938) declined as The Commercial Times reported that Apple may delay the iPhone 5S to the end of this year from September or October. Pegatron Corp. slumped 7 percent in Taipei, the most since November 2011, while TPK Holding Co. sank 4.1 percent.
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