Emerging Stocks Rebound Led by Technology Gauge
Emerging-market stocks rose from a three-week low as technology companies rallied and investors speculated that the Federal Reserve will keep U.S. interest rates low to support economic growth.
Hon Hai Precision Industry Co. (2317) rose to a four-year high in Taipei after its chairman said profit will increase at least 10 percent this year. A gauge of Hong Kong-traded Chinese shares surged 1.5 percent. The Ibovespa climbed from a two-week low in Sao Paulo as Vale SA gained amid a rally in iron-ore prices. Philippine stocks entered a bull market. Russia’s Micex Index dropped for a second day as the U.S. warned of new sanctions.
The MSCI Emerging Markets Index added 0.5 percent to 1,046.81. The measure has risen 5.2 percent this quarter. Data yesterday showed the U.S. economy contracted in the first quarter by the most since the depths of the last recession as consumer spending cooled.
“The main reason for the gains is the GDP revision in the U.S. and the impact that it had on rates, which will affect the timing of the first Fed hike,” Anders Svendsen, an economist at Nordea Bank Denmark A/S in Copenhagen, said by phone today. “Even though we see intraday reactions to news from Ukraine and Iraq, it’s not something that affects the general trends.”
A Bloomberg gauge tracking 20 emerging-market currencies declined less than 0.1 percent. The premium investors demand to own developing-nation debt over U.S. Treasuries widened two basis points to 265 basis points, according to JPMorgan Chase & Co. indexes. Nine out of 10 industry groups in the MSCI Emerging Markets Index advanced, led by the 1.2 percent jump in the technology gauge.
Hon Hai, an assembler of Apple Inc.’s iPhones, rose 2.1 percent after Chairman Terry Gou’s comments on his earnings target to shareholders. The stock was also raised to overweight from neutral at HSBC Holdings Plc. The Taiex Index gained 0.9 percent to the highest level since November 2007.
The Ibovespa gained 0.2 percent as Vale advanced 2.2 percent. Iron ore for immediate delivery climbed 1.7 percent to $95.30 a ton, according to prices compiled by The Steel Index Ltd.
South Africa’s equity index climbed 0.8 percent, and the rand weakened 0.5 percent against the dollar. The country’s producer-price inflation unexpectedly slowed in May, data showed today.
The Micex dropped 0.6 percent, extending yesterday’s 2.4 percent slump. Ukraine Economy Minister Pavlo Sheremeta said he isn’t “too optimistic” that the country can soon clinch a peace deal with separatist rebels. Ukrainian bonds due in July 2017 fell, sending the yield up five basis points to 8.65 percent.
With momentum behind peace efforts flagging, the U.S. is preparing sanctions against Russia on technology aimed at exploiting and producing oil and gas products, a major part of that country’s economy, according to three people briefed on the plans.
Dubai’s DFM General Index retreated 0.7 percent after posting its biggest surge in nine months yesterday. It entered a bear market this week.
The MSCI Emerging Markets Index has increased 4.4 percent this year and trades at 11 times projected 12-month earnings, compared with a multiple of 15.1 for the MSCI World Index, which is up 4.6 percent in 2014, data compiled by Bloomberg show.
China’s first companies to go public in four months jumped 44 percent on their debut. Shandong Longda Meat Foodstuff Co. (002726), Wuxi Xuelang Environmental Technology Co. and Feitian Technologies Co. surged by the maximum limit after each of their initial public offerings were oversubscribed by at least 120 times.
China Gas Holdings Ltd. rallied 6.9 percent to a record in Hong Kong after profit beat estimates and on plans to increase sales threefold by the end of the decade. The Shanghai Composite Index climbed 0.7 percent to a one-week high.