Emerging Stocks Advance on China Trade Surprise; Ibovespa Drops
Emerging-market stocks rose to a two-week high as China’s trade data topped estimates and the Federal Reserve signaled the U.S. still needs stimulus. Brazil’s Ibovespa retreated as commodity prices declined.
The Hang Seng China Enterprises Index (HSCEI) rebounded from a six-week low as PetroChina Co. (857) advanced. Vietnam’s VN Index slumped the most since 2001 amid escalating tension with China. The Ibovespa sank the most in three weeks, led by state-run oil company Petroleo Brasileiro SA. The ruble weakened as Ukraine separatists said they’re pushing ahead with a vote.
The MSCI Emerging Markets Index rose 0.4 percent to 1,008.85. Data showed China’s exports and imports unexpectedly rose in April, helping leaders put a floor under a slowdown in the world’s second-biggest economy. Fed Chair Janet Yellen told lawmakers the central bank will keep rates near zero for a “considerable time” after ending monetary stimulus.
“The key driver on emerging markets in general is Yellen’s comments overnight on U.S. monetary policy,” John Lomax, an emerging-market strategist at HSBC Holdings Plc (HSBA), said by phone from London. “That’s lifting the asset class as a whole. We had slightly better trade numbers out of China, which helped the Chinese equity market.”
Nine of 10 industry groups in the developing-nation measure advanced, led by phone and consumer discretionary companies. The UX Index of equities in Ukraine rose 0.4 percent. The hryvnia fell 0.3 percent to 11.655 per dollar.
The Micex (INDEXCF) rose less than 0.6 percent in Moscow. The ruble depreciated 0.3 percent to 35.0286 versus the dollar. Ukraine’s Donetsk region won’t delay a May 11 referendum, Aleksandr Maltsev, a spokesman for the so-called Donetsk People’s Republic, said by phone.
President Vladimir Putin yesterday softened his rhetoric on Ukraine, urging separatists to postpone the vote on regional autonomy while pledging to pullback troops from Ukraine’s border. The North Atlantic Treaty Organization said there’s no sign of any Russian withdrawal from the frontier.
“We saw a bounce yesterday on the back of hopes of a de-escalation and that’s being partially reviewed this morning,” Lomax said. “Even if some kind of settlement is reached there will be a long-term change in perceptions toward Russia, which have scope to potentially increase the political discount in the market.”
Vietnam’s VN Index slumped 5.9 percent. The measure has tumbled 13 percent from this year’s peak on March 24 amid growing tension with China over disputed waters and speculation that leveraged traders are liquidating positions. The gauge has wiped out most of the 20 percent advance through its March high that had made the gauge this year’s top performer in Asia.
The Ibovespa declined 1.3 percent. Brazilian stocks entered a bull market yesterday after rising 20 percent from their March 14 low.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell five basis points today to 279, according to JPMorgan Chase & Co. indexes.
The emerging-markets gauge has gained 0.6 percent this year and trades at 10.9 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has gained 1.5 percent in 2014, taking its valuation multiple to 14.2.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong advanced 0.8 percent, halting a two-day loss. PetroChina, the country’s biggest oil and gas producer, rose 1.7 percent, the steepest increase in more than a week.
The Shanghai Composite Index (SHCOMP) climbed 0.3 percent, the most this week. China’s overseas shipments added 0.9 percent from a year earlier, while imports rose 0.8 percent, official data showed.
Thailand’s SET Index sank the most since Jan. 27 and the baht lost 0.3 percent on concern global investors will shun the country after a court ruling to remove Yingluck Shinawatra as prime minister threatened to prolong a political crisis.