Emerging-Market Stocks Advance as Ibovespa SurgesElena Popina and Natasha Doff
Emerging-market stocks rose as the Ibovespa surged on speculation Brazilian President Dilma Rousseff will be voted out of office in a runoff after overseeing the slowest economic growth since 1992.
State-run oil producer Petroleo Brasileiro SA led gains in Sao Paulo, rallying 5.8 percent. The real strengthened the most among emerging-market currencies. The Micex Index ended a two-day drop in Moscow as OAO Sberbank climbed and Mark Mobius, chairman of Templeton Emerging Markets Group, said Russian stocks offer “tremendous” value.
The MSCI Emerging Markets Index added 0.3 percent to 984.38. The gauge gained 0.8 percent in the past five days, ending a streak of six weekly losses. The Ibovespa rose the most among the world’s equity benchmarks as a voter poll fueled speculation that Senator Aecio Neves will gain support and beat Rousseff in the Oct. 26 election runoff.
“Investors have always had great interest in working in Brazil, investing in Brazil, but they have been longing for the right political environment,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. “The right political climate would propel economic development, and there is hope that the new government will provide this climate and make investors welcome.”
The Ibovespa gained 2.4 percent. The real strengthened 1.1 percent, the best performance among 24 emerging-market currencies tracked by Bloomberg.
Sberbank gained 1.3 percent, contributing the most to the Micex’s 0.5 percent gain. The index trades at 4.7 times projected 12-month earnings, near the level it was at in March after President Vladimir Putin moved to annex the Black Sea peninsula of Crimea.
Russia is “the cheapest major market in the world today,” Mobius, who overseas about $40 billion at Templeton, said in a Bloomberg TV interview today from Hong Kong.
The ruble lost 0.5 percent against the dollar. It pared a decline of as much as 0.7 percent after Russia’s investment-grade credit rating was affirmed by Standard & Poor’s, dispelling concern that a downgrade to junk may deepen a selloff in the currency and other assets. The central bank has spent more than $17 billion in October to slow the world’s worst depreciation in the last three months after U.S. and European Union sanctions over Ukraine triggered a dollar shortage.
Seven out of the 10 industry groups in the developing-nation measure advanced today, led by utilities and energy companies.
Great Wall Motor, China’s largest SUV maker, tumbled 5.1 percent in Hong Kong after its third-quarter profit dropped to 1.63 billion yuan ($266 million) from a year earlier. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong lost 0.5 percent.
Ukraine’s UX Equities index rose 0.8 percent before parliamentary elections on Oct. 26. Backing for President Petro Poroshenko’s party and the Popular Front of Prime Minister Arseniy Yatsenyuk exceeds 40 percent.
The emerging-markets gauge has fallen 1.8 percent this year and trades at 10.6 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has gained 0.4 percent and is valued at 14.6 times.
The Shanghai Composite Index posted its biggest weekly loss in four months. Concern that initial public offerings will divert funds from existing shares and a planned stock link with Hong Kong will be delayed has sent mainland shares down the most since March compared with their Hong Kong counterparts.
The premium investors demand to own developing-nation debt over U.S. Treasuries was unchanged at 308 basis points, according to JPMorgan Chase & Co. indexes.