Emerging Stocks Rally on Economic Data as Samsung Surges
Emerging-market stocks rose for a fourth day, the longest rally in almost a month, as economic data from Germany to the U.S. bolstered the outlook for global growth and Samsung Electronics (005930) Co. lifted technology shares.
The MSCI Emerging Markets Index increased 0.8 percent to 965.94. Benchmark gauges from South Korea to Russia added at least 1.4 percent and Brazil’s Ibovespa gained a fifth day in the longest rally since April. Samsung Electronics, the world’s largest smartphone maker, surged 4.7 percent in Seoul on bets the company may buy back shares. OAO Gazprom paced gains in energy shares in Moscow, while steelmaker Cia. Siderurgica Nacional SA advanced to a three-month high in Sao Paulo.
A measure of technology companies led gains among the 10 groups in the benchmark for developing nations, rallying 2.4 percent. Economic reports showed that German investor confidence topped forecasts and U.S. retail sales increased. Chinese stocks are attractive as the risk of a sudden slump in the world’s second-biggest economy is receding and valuations trail other markets, according to Baring Asset Management Ltd.
“You’ve got better growth prospects,” Peter Sorrentino, who helps manage about $14.7 billion at Huntington Asset Advisors in Cincinnati, said by phone. “We’re seeing some positive signs out of Europe, and the fact that China seems to have stabilized holds the prospect that things don’t get worse. That tends to be encouraging.”
Today’s rally trimmed this year’s plunge in the MSCI Emerging Markets Index to 8.5 percent, compared with a 14 percent surge in the MSCI World Index. The broad measure of developing nations is trading at 10.2 times estimated earnings, below the valuation of developed markets of 13.9.
The iShares MSCI Emerging Markets Index exchange-traded fund added 0.6 percent to $39.97. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, fell 1.4 percent to 21.43.
Brazil’s Ibovespa added 0.6 percent as signs that the global economy is improving boosted raw-material producers, offsetting losses by homebuilders. Steelmaker CSN extended a five-day rally to 16 percent. The real weakened.
The Micex Index rose to the highest level in three weeks as Gazprom, Russia’s gas export monopoly, and OAO Mechel, the nations biggest producer of coal for steelmakers, rallied more than 2.1 percent. Benchmark gauges in the Czech Republic and Turkey gained, while stocks in Hungary (BUX) retreated.
China’s stocks rose for a third day as lenders advanced after Industrial Bank Co. surged to a one-month high after reporting a jump in first-half profit. The nation’s shares trade at the cheapest valuation of the world’s top 10 stock markets, data compiled by Bloomberg show.
“China’s overall market is stabilizing, relieving concerns regarding the hard landing scenario for the rest of this year,” said Agnes Deng, head of Hong Kong and China equities at Baring, which manages $57.4 billion globally. “China stocks’ valuation is quite cheap and attractive.”
The Kospi Index jumped 1.5 percent as Samsung surged the most in a month. A buyback “will show the company’s willingness to boost the share price, if proven to be true,” said Kim Young Chan, an analyst at Shinhan Investment Corp. Jason Kim, a Samsung spokesman, declined to comment.
India’s S&P BSE Sensex (SENSEX) gained 1.5 percent as the government announced additional measures to trim the current-account deficit and support the nation’s currency. ICICI Bank Ltd. (ICICIBC), the nation’s biggest private lender, rose the most since June 28. The rupee strengthened.
The premium investors demand to own emerging-market debt over U.S. Treasuries slid 0.09 percentage point to 317 basis points, according to JPMorgan Chase & Co.
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