Emerging Stocks Advance as Energy, Raw-Material Shares Rally

Emerging-market stocks rose from a two-week low as energy shares pushed Russia’s benchmark to the highest since February and Brazilian commodity producers gained after Chinese manufacturing growth boosted their export outlook.

The Micex Index rallied as OAO Gazprom gave Ukraine an extra week to prepay for natural-gas supplies or risk a cutoff. The Ibovespa rose from the lowest in six weeks. Dubai’s stocks rose to a two-week high after the emirate was added to the developing-nation equity benchmark. Qatar’s QE Index sank on speculation it may lose the right to host the 2022 World Cup.

The MSCI Emerging Markets Index rose 0.2 percent to 1,029.50. Gazprom gave Ukraine a week before shifting the nation to advance payments and held out an offer of lower prices as talks resume to avert supply disruptions. China’s statistics bureau and logistics federation said the country’s Purchasing Managers’ Index increased to 50.8 in May, compared with the 50.7 estimate of economists surveyed by Bloomberg. A level above 50 indicates expansion.

“A pickup in manufacturing activity is going to boost commodity demand,” Alan Gayle, who helps oversee about $50 billion in assets as a senior strategist at RidgeWorth Capital Management, said by phone from Atlanta. “The China data was better than expected, and it does suggest that China is steering a course toward a slowdown without going into a hard landing. That’s reassuring for the markets.”

Russia, Brazil

Six out of ten industry groups in the emerging-market stock gauge gained today, led by raw-material producers and energy companies. Markets in China, Hong Kong and Taiwan were shut for holidays today.

The Micex advanced 2.3 percent to the highest since Feb. 26. Gazprom, the world’s largest natural-gas producer, added 1.7 percent.

Ukraine transferred $786 million for gas it received in February and March to Gazprom after talks brokered by the European Union began in Berlin last week. Russian assets have been rebounding to levels seen before President Vladimir Putin’s incursion into Crimea as the prospect of tougher sanctions from the U.S. and the EU fades.

“The absence of bad news from Ukraine” has been a positive sign for investors, Martial Godet, the head of emerging-market equity and derivatives strategy at BNP Paribas SA in Paris, said by e-mail.

Mining company Vale SA gained 2.1 percent as Brazilian raw-material exporters rallied. The Ibovespa rose 0.7 percent. Commodity producers account for about one-third of the equity gauge’s weighting, and China is Brazil’s biggest trading partner.

Egypt, Dubai

Egypt’s benchmark EGX 30 Index gained 1.5 percent, the most since May 14, after the International Monetary Fund defended the country’s decision to tax investor profits. The gauge tumbled 4.2 percent yesterday after the government submitted the proposed law to the presidency for ratification.

The DFM General Index, the world’s best-performing stock gauge this year and last, climbed 1.9 percent as it traded as an emerging market. Venture capital company Dubai Investments PJSC jumped 5.3 percent.

Shares in Qatar, which was also promoted to developing-nation status, tumbled 1.1 percent. Soccer governing body FIFA vice-president Jim Boyce said he would support a re-vote to find a new host for the Qatar World Cup in 2022 if corruption allegations can be proven, according to the BBC. The Sunday Times reported soccer officials took bribes in return for support of the Qatari bid, while the country’s Bid Committee denied all allegations.

India Manufacturing

MSCI’s developing-markets gauge climbed 3.3 percent last month, the most since October, and trades at 10.7 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index gained 1.6 percent in May and is valued at a multiple of 15.

The S&P BSE Sensex rose 1.9 percent as a private gauge of Indian manufacturing climbed to 51.4, according to HSBC Holdings Plc and Markit Economics.

True Corp. Pcl increased in Thailand after the junta unveiled plans to boost economic growth and Moody’s Investors Service reaffirmed the nation’s sovereign rating. The SET Index advanced 1.8 percent to the highest since since Oct. 31.

Indonesia’s rupiah slipped 0.8 percent versus the dollar, while South Africa’s rand fell to the lowest level in more than a month.

Vietnam’s VN Index retreated 0.9 percent, snapping a five-day gain. The government has prepared evidence for a legal suit challenging China’s claim to waters off the Vietnamese coast and is considering the best time to file it, Prime Minister Nguyen Tan Dung said in an interview last week.

The premium investors demand to own emerging-market debt over U.S. Treasuries slipped six basis points to 267, according to JPMorgan Chase & Co. indexes.

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