Emerging Stocks Rise as Korea Outlook Lifts Tech EquitiesGan Yen Kuan and Victoria Stilwell
Emerging-market stocks rallied the most in a week, with technology shares reaching their highest level since 2000, as South Korea’s central bank said the improving global economy is boosting domestic growth.
LG Display Co. climbed the most in more than three months in Seoul after Samsung Securities Co. raised its recommendation for the stock. OAO Rostelecom rose in Moscow on a report of a stake sale. AngloGold Ashanti Ltd. sank to a December 2008 low as the third-biggest producer of the metal said it will cut investment and may reduce output estimates. Brazil’s Bovespa index dropped a sixth day, the longest stretch since May.
The MSCI Emerging Markets Index rose 0.4 percent to 1,068.46 in New York. The measure pared a gain of as much as 0.9 percent as minutes from the U.S. central bank’s last meeting showed a debate over the risks and benefits of further stimulus action. Bank of Korea Governor Kim Choong Soo said yesterday that better prospects for the world economy boosts the odds of South Korea topping this year’s growth forecast.
“The global outlook shows sustainable growth recovery,” Tan Lip Kwang, who helps manage the equivalent of $1 billion at K&N Kenanga Holdings Bhd., said by phone in Kuala Lumpur. “When the global economy recovers, demand for certain goods will pick up, like electronic goods. Korea is highly dependent on exports, so the global economic recovery is helping exporters there.”
Equities pared gains after the release of the U.S. Federal Open Market Committee’s Jan. 29-30 meeting today. Several Federal Reserve policy makers said the central bank should be ready to vary the pace of their $85 billion in monthly bond purchases. The Standard & Poor’s 500 Index slid 1.2 percent.
“People may think the tide will be turning,” Pablo Goldberg, global head of emerging market research at HSBC Securities Inc., said by phone from New York. “If you start removing liquidity without having the growth rate, you lack a little bit of a driver.”
The iShares MSCI Emerging Markets Index exchange-traded fund, which tracks developing-nation shares, slid 0.9 percent to 43.69. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 9.8 percent to 16.47.
West Texas Intermediate crude tumbled 2.3 percent, the most in three months following declines in metals on speculation that a commodity fund is selling positions. The S&P GSCI Index dropped 1.1 percent to the lowest level since Jan. 28.
A gauge of technology stocks in the MSCI Emerging Markets Index jumped 2.1 percent, the most among 10 industry groups, while commodity and utility companies declined. The broader measure has risen 1.3 percent this year, trailing a 5.3 percent gain in the MSCI World Index of developed-country stocks. The emerging-markets index trades at 10.6 times estimated 12-month profit, compared with the MSCI World’s 13.8 times, according to data compiled by Bloomberg.
The Mexican IPC index dropped 0.8 percent, led by Urbi Desarrollos Urbanos SAB, which lost 3.7 percent. Brazil’s Bovespa declined 2 percent, reversing earlier gains, as a central bank report that showed Brazil’s economic activity slowed. Mining company Vale SA fell 3.6 percent, the most since August 14, following commodities prices lower.
Bulgaria’s benchmark Sofix Index slid 2.7 percent, falling for a fifth day in its longest losing streak since April. Prime Minister Boyko Borissov submitted his resignation to Parliament after more than a week of anti-government protests sparked street violence in the European Union’s poorest nation.
Russia’s Micex Index fell 0.7 percent, its first decline in three days. OAO Aeroflot, the nation’s biggest airline, slipped 2.8 percent, its steepest loss in three weeks. Rostelecom climbed 1.9 percent, the most since Jan. 18. Investor Konstantin Malofeev is in talks with Mikhail Prokhorov’s Onexim Group on selling his stake in the company, Vedomosti reported, citing people it didn’t identify.
The WIG20 Index in Warsaw lost 1.4 percent, snapping a three-day rally. The zloty gained for a third day versus the euro, up 0.3 percent to 4.158. Central banker Anna Zielinska-Glebocka said she supports another interest rate cut in March, after which further moves will depend on the central bank’s new inflation and economic growth forecasts to be released next month, PAP newswire reported today.
PGE SA, Poland’s largest utility, dropped 6 percent to its lowest level since at least December 2009 on speculation the state-controlled company will reduce its dividend after an asset writedown.
The Czech PX Index added 0.3 percent, snapping a two-day decline. Turkey’s ISE National 100 Index added 0.8 percent in a second day of gains. Eregli Demir & Celik Fabrikalari AS, a Turkish steelmaker, retreated 1.7 percent to the lowest since Nov. 30 after 2012 net income missed analysts’ estimates.
The FTSE/JSE Africa All Share Index had the biggest loss since Nov. 28 as commodity companies retreated. AngloGold Ashanti said capital expenditure will decline to $2.1 billion from $2.2 billion in 2012, according to a statement today. Labor unrest cut production, reducing profit 29 percent last year. Data showed the nation’s inflation slowed to a five-month low in January.
Indian stocks held at a two-week high as some investors avoided taking fresh bets before next week’s budget. Reliance Industries Ltd. rallied the most in a month, while Tata Consultancy Services Ltd. surged to a record.
The won strengthened for a second day against the dollar, climbing 0.3 percent, as the central bank chief signaled further monetary easing isn’t needed for now. The ringgit advanced after Malaysia’s economy grew at the fastest pace in 2 1/2 years in the fourth quarter as Prime Minister Najib Razak boosted spending ahead of an election that will test his grip on power.
South Korea’s Kospi Index surged 2 percent, leading gains among Asian benchmark gauges. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong jumped 1.4 percent. The Shanghai Composite Index gained 0.6 percent as a gauge of health-care stocks rallied the most in more than two years on speculation the government is seeking to bolster the industry. The Philippine Stock Exchange Index added 0.4 percent to a record, while the Jakarta Composite Index gained 0.7 percent, climbing to a record.
Trading volume for the Jakarta Composite was 82 percent above its 30-day average, data compiled by Bloomberg show. Volume was 34 percent higher for Taiwan’s Taiex.
LG Display, the world’s second-largest maker of flat panels, surged 5.1 percent, the most since Oct. 29. The stock was raised to buy at Samsung Securities, which said the company’s earnings will recover from the second quarter.
Samsung Electronics Co., the world’s largest television maker, advanced 3.6 percent, the most since Jan. 2. Expectations for higher prices of memory chips and potential investments in organic light-emitting diodes panels drove Samsung and other technology stocks higher, Seo Won Seok, an analyst at Korea Investment & Securities Co., said by phone.
LG Innotek Co. rallied 6.2 percent in Seoul, the biggest gain in the MSCI Emerging Markets Information Technology Index.
The CSI 300 Financials Index dropped 0.3 percent, in its steepest five-day drop since September 2011. China’s government may increase borrowing costs and downpayment requirements for some home buyers, the Shanghai Daily reported, citing an unidentified banking official. The Shanghai Securities News said the Beijing municipal government will meet with developers tomorrow to discuss possible tightening policies. The paper cited an unidentified person from the local housing commission.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 3 basis points, or 0.03 percentage point, to 272, according to JPMorgan Chase & Co.’s EMBI Global Index.