Emerging Stocks Post Best Quarter Since 2012 on Growth

Emerging-market stocks rose, posting the biggest quarterly gain since 2012, as signs of a revival in economic growth lured investors. Bulgarian stocks surged the most in the world, rebounding from last week’s five-month low.

The MSCI Emerging Markets Index advanced 0.4 percent to 1,050.78 in New York, extending its increase this quarter to 5.6 percent. The measure has risen for a fifth month, the longest rally since 2007. Developing-nation currencies appreciated 0.8 percent in the three months through today, the first such gain since the end of 2012, led by the won. The Ibovespa recorded the biggest monthly gain since March.

Asset managers have piled almost $11 billion into developing-nation exchange-traded funds listed in the U.S. this quarter, the most since 2012, on optimism economic growth in countries such as China and India will rebound. An uneven U.S. recovery spurred speculation the Federal Reserve will keep interest rates at a record low for longer.

“Expectations that developed-market monetary policy will remain ultraloose for a long time” have boosted stocks, Maarten-Jan Bakkum, an emerging-market strategist at ING Investment Management Co. in The Hague, said by e-mail. “The room for EM equity outperformance is smaller now, as positioning has moved a lot in recent months.”

Iraq Violence

Emerging-country shares, whose jump outpaced a 4.2 percent advance for developed markets, gained today as crude fell amid bets continuing violence in Iraq won’t disrupt supply from OPEC’s second-largest oil producer. Yields on Iraq’s January 2028 debt rose five basis points to 7.02 percent, the first gain in three days.

All 10 industry groups in the developing-nation index rose, led by health-care companies, while a gauge of technology shares climbed to a record.

The Sofix Index in Sofia surged 5.8 percent, led by First Investment Bank AD’s 27 percent surge, after the European Union authorized state aid for cash-strapped lenders. The EU gave Bulgaria authority to provide a 3.3 billion-lev ($2.3 billion) credit line for lenders after police there arrested seven men on suspicion of orchestrating a run on deposits.

The central bank last week placed Bulgaria’s fourth-largest Corporate Commercial Bank AD under administration and agreed to recapitalize it after a big depositor withdrew funds.

The Ibovespa rose less than 0.1 percent today, capping a 3.8 percent advance for June. Petroleo Brasileiro SA, the state-run oil company, gained 3.6 percent in the same period, its fourth straight winning month.

Ruble Weakens

Egypt’s benchmark EGX 30 Index, which is up 4.6 percent this quarter, advanced 1.1 percent even as a blast near the country’s Presidential palace killed a police officer. Commercial International Bank Egypt SAE gained for the first time since June 23 as the country’s bourse said it executed a block trade of 1.29 billion pounds ($180 million).

Russia’s ruble weakened 0.9 percent versus the dollar, paring a 3.6 percent gain in the past three months, its best quarterly performance since 2012. Russia’s Micex Index, which has rallied 7.8 percent from the beginning of April, slipped 0.1 percent today.

Russian President Vladimir Putin and his Ukrainian counterpart, Petro Poroshenko, spoke by phone for an hour with German Chancellor Angela Merkel and French President Francois Hollande. They agreed to carry on talking in the search for a deal to end the separatist conflict in eastern Ukraine.

The U.S. and EU have refrained from imposing deeper sanctions against Putin even as they accuse his government of helping separatists in eastern Ukraine.

Dubai Tumbles

Dubai’s DFM General Index sank 4.4 percent today. The equity measure posted its worst quarter since June 2012 as investors shunned the emirate’s property companies on concern the industry may be overheating. The gauge entered a bear market last week after tumbling 27 percent from its May 6 peak.

The Shanghai Composite Index rose 0.6 percent as tomorrow’s manufacturing data may add to signs the biggest emerging economy is stabilizing after a two-quarter slowdown.

The Chinese equity gauge has climbed 0.7 percent this quarter, the first advance since September, after the government cut reserve-requirement ratios for some banks and introduced mini-stimulus in the form of infrastructure spending to prevent a property slowdown.

India’s S&P BSE Sensex index advanced 1.3 percent today. It has rallied 14 percent this quarter as investor optimism over the new government lured overseas funds.

South Korea’s won jumped 5.2 percent versus the dollar in the past three months, the most among developing-nation peers.

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