Emerging-Market Stocks Extend Monthly Gain as Yuan SinksJulia Leite, Zahra Hankir and Rajhkumar K Shaaw
Emerging-market stocks rose, capping the biggest monthly increase since October, after slower-than-estimated U.S. growth data bolstered speculation the Federal Reserve will keep the pace of economic stimulus.
The MSCI Emerging Markets Index advanced 0.3 percent to 966.42, bringing its February rally to 3.2 percent. Poland’s WIG20 index jumped 2.1 percent after a report showed the economy accelerated for a third straight quarter. Ukraine’s hryvnia climbed the most since 2008 as policy makers took steps to stem a run on the currency. China’s yuan tumbled the most on record on speculation the central bank will widen the trading band.
Equities joined a global advance after government data showed the economy in the U.S. grew at a slower pace in the fourth quarter than previously estimated, giving the expansion less momentum heading into 2014. Fed Chair Janet Yellen, speaking before the Senate Banking Committee yesterday, said only a “significant” change in the outlook for the world’s largest economy would prompt a slower pace of stimulus tapering.
“Investors are not sure about what’s going to happen and they’re more inclined to look at a glass half full rather than looking at the negative side of the reports,” Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said by phone today. “The generally positive tone of investor sentiment is helping emerging markets.”
The iShares MSCI Emerging Markets Index exchange-traded fund fell 0.7 percent to $39.48. Twenty out of the 24 developing-nation currencies rose, led by the Czech koruna. The premium investors demand to own emerging-market debt over U.S. Treasuries sank 0.07 percentage point to 320 basis points, according to JPMorgan Chase & Co.
Brazil’s Ibovespa extended its fourth straight monthly drop as iron-ore producer Vale SA slid. The real declined the most in emerging markets as a measure of the government’s fiscal accounts was worst than economists forecast, reviving concern that fiscal deterioration will lead to a reduced credit rating.
Russian stocks extended the biggest weekly drop since June as OAO Mechel, the nation’s biggest coking-coal producer, plunged to a record. Poland’s WIG20 index rose the most since Feb. 6. The hryvnia appreciated 10 percent at 4:38 p.m. in Kiev, according to data compiled by Bloomberg. Ukraine’s central bank limited access to foreign-currency deposits as part of “temporary” controls imposed to preserve remaining resources.
The yuan slid as much as 0.86 percent to a 10-month low of 6.1808 per dollar in Shanghai, the biggest intra-day loss in China Foreign Exchange Trade System prices going back to 2007. The drop was the largest since China unified official and market exchange rates at the start of 1994, Bloomberg data show, and took it within 0.04 percent of the weak end of its trading band.