Emerging Stocks Fall From Seven-Month High While Russia Rallies
Emerging-market stocks dropped from a seven-month high as industrial and utility shares snapped two days of gains, offsetting an advance in Russian stocks.
The MSCI Emerging Markets Index slid 0.1 percent to 1,041.84 in New York. Naver Corp. (035420), which operates South Korea’s most-popular search engine, was the biggest drag on the gauge. Russia’s Micex Index advanced to a three-month high and Ukraine’s 2017 Eurobonds rose for a 10th straight day after billionaire Petro Poroshenko won Ukraine’s presidential election.
MSCI Inc.’s developing-nation gauge reached the highest since October on May 23, boosting the 14-day relative strength index to 72. A reading above 70 indicates to some investors that a security is overbought.
“The markets are taking a breather, which is healthy,” Hertta Alava, the head of emerging markets at FIM Asset Management Ltd. in Helsinki, said by e-mail. “The relief rally is continuing in Russia as things haven’t got worse.”
The developing-nation gauge has advanced 3.9 percent this year and trades at 10.8 times projected 12-month earnings, almost the highest level since January, according to data compiled by Bloomberg. The MSCI World Index has gained 2.5 percent and is valued at a multiple of 14.9.
Five of 10 industry groups in the emerging-markets gauge fell today, led by utility and industrial stocks.
Isagen SA tumbled 4.6 percent in Bogota trading after Oscar Ivan Zuluaga, who opposes the sale of the government’s stake in the power company, led the first round of Colombia’s presidential vote.
Naver slumped 4 percent after Daum Communications Corp. (035720), which competes with the company in the Internet portal industry, said it will merge with Kakao Corp., South Korea’s largest mobile messaging service provider.
Samsung Electronics Co., which has the largest weighting in the emerging-markets index, dropped 0.4 percent after Apple Inc. sought an order to block the sale of some of the South Korean company’s phones.
The Micex advanced 0.7 percent to the highest level since Feb. 26 as OAO Gazprom and OAO Sberbank rallied more than 1 percent. Ukraine’s Central Election Commission declared Poroshenko the winner with 54.2 percent of the vote, with 90 percent of ballots counted, Novosti Donbassa said. Russian and Ukrainian assets rallied this month amid speculation a clear electoral verdict would spur talks on calming the crisis.
Brazil’s Ibovespa rose 0.6 percent as economists raised the country’s growth outlook. Cia. Siderurgica Nacional SA led an advance of raw-material producers, rallying 3.7 percent after announcing a plan to buy back shares.
Dubai DFM General Index jumped 1.9 percent while Abu Dhabi’s ADX General Index surged 2.5 percent. Emaar Properties PJSC (EMAAR), the developer of the world’s largest mall, advanced 3.7 percent on plans to list its retail division on the Dubai Financial Market after receiving an exemption that allows it to sell 25 percent of the unit.
The Borsa Istanbul 100 Index increased 0.7 percent as Turkey’s Prime Minister Recep Tayyip Erdogan was reported by the Sabah newspaper as asking whether the central bank was “kidding” when it lowered the nation’s benchmark interest rate by 0.50 percentage point after more than doubling it to 10 percent in January.
The Sensex (SENSEX) rose for a third straight day, heading for its best month since January 2012, amid optimism that Narendra Modi will form a government capable of reviving economic growth. Modi has pledged to reduce the size of India’s government after winning a parliamentary majority.
Sino Biopharmaceutical (1177) Ltd. jumped 5.9 percent in Hong Kong after posting higher first-quarter net income. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 0.2 percent in its fourth day of gains.
The Shanghai Composite Index (SHCOMP) rose 0.3 percent while China’s benchmark money-market rate fell the most in three weeks after Premier Li Keqiang said the nation will fine-tune policy to support the economy.