Emerging Stocks Advance to Six-Month High as India, Russia GainNatasha Doff and Zahra Hankir
Emerging-market stocks rose to a six-month high as India’s benchmark gauge soared to a record and Russian equities rose, offsetting declines in China and Brazil.
The Sensex Index added 1 percent, while the rupee appreciated 0.3 percent on bets India’s new government will take steps to revive the economy. Russia’s Micex rose to the highest since late February as OAO Gazprom posted a record-long streak of gains. China’s Shanghai Composite Index slid to a three-week low. The Ibovespa sank the most in a week as economists cut their Brazil growth forecast to the slowest ever.
The MSCI Emerging Markets Index increased 0.4 percent to 1,035.62. Narendra Modi’s Bharatiya Janata Party swept to power on May 16, putting him in a position to bolster Asia’s third-biggest economy. Russian President Vladimir Putin’s visit to China this week is helping spark the longest rally in Gazprom since 2006 on bets the leader will return with a long-sought gas supply agreement.
“Markets are seeing BJP’s overwhelming win as a chance for the new government to unleash the potential that India has,” Simon Quijano-Evans, head of emerging-market research at Commerzbank AG in London, said by e-mail. “On balance, Russia sentiment should be better this week, partly driven by Putin’s visit to China.”
The developing-nation index has gained 3.3 percent this year and trades at 10.7 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index of developed countries has advanced 1.6 percent in the period and is valued at a multiple of 14.2.
The Micex gained 1.6 percent to the highest since Feb. 28. Gazprom, the world’s largest natural-gas producer, rose 2.6 percent, taking a nine-day rally to 18 percent. The gas monopoly has been seeking a long-term supply contract for a decade.
Putin is turning to Asia as the U.S. and its allies expand sanctions tied to the incursion in Ukraine. After failing to agree on financial terms in previous talks, rising demand for fuel in China has pushed prices to a level that will probably be acceptable to both sides, Bank of America Corp. said in a May 16 report.
The ruble strengthened 0.6 percent versus the dollar, the first gain in three days, and trimming the loss in 2014 to 4.8 percent. Ukraine’s UX Index surged 3.4 percent, while stocks in Hungary and South Africa added at least 0.7 percent.
The S&P BSE Sensex index rose for a third day, while the rupee advanced 0.3 percent against the greenback. Modi’s BJP and its allies won about 61 percent of seats in parliament as voters punished the Congress alliance for slowing growth and Asia’s second-fastest inflation.
Six out of 10 industry groups in the MSCI Emerging Markets Index increased, led by utility and energy companies. The premium investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 280, according to JPMorgan Chase & Co. indexes.
The Shanghai Composite slid 1.1 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 0.4 percent in its third day of declines.
Data yesterday showed China’s new-home prices rose in April in the fewest cities in a year and a half, while the central bank ordered banks to curb interbank lending.
Cosmetics seller Natura Cosmeticos SA sank 2.2 percent as Brazilian consumer stocks dropped after economists lowered their gross domestic product growth forecast to 1.62 percent from 1.69 percent, according to a weekly central bank survey published today. The Ibovespa fell 1.2 percent.
Dubai’s DFM General Index slid 5.5 percent, the most since Aug. 27. MSCI, whose gauges are tracked by investors managing about $8 trillion in assets, last week named companies from the United Arab Emirates including Emaar to its developing-markets gauge.
Dubai’s benchmark more than doubled in the past 12 months as investors anticipated reclassification from the country’s frontier-market status and real estate prices recovered. The gauge’s drop today is the steepest among 93 global equity indexes tracked by Bloomberg.