Emerging Markets Rise for Fourth Day as Commodity Prices Climb

Updated on
  • Ibovespa rallies as Rousseff moves closer to impeachment
  • Russian ruble leads currency advance as Brent crude gains

Emerging-market stocks and currencies rose for a fourth day as rising raw-material prices bolstered commodity producers and demand for riskier assets.

The MSCI Emerging Markets Index jumped to the highest level this month as all 10 industry groups advanced. Brazilian equities rallied after a vote by lawmakers pushed President Dilma Rousseff a step closer to impeachment. Russia’s ruble led currencies higher as Brent crude rallied to a four-month high. The extra yield investors demand to own developing-nation bonds rather than Treasuries narrowed for a third day.

Asia’s emerging markets have lured more than $20 billion of inflows into their local-currency bonds and stocks this year as investors scaled back bets the Federal Reserve will increase interest rates this year and oil recovered from a 12-year low. Still, some are skeptical the rally will last, as concern about global growth remains. The International Monetary Fund on Tuesday cut its 2016 global growth projection to 3.2 percent from 3.4 percent.

Emerging markets are “strong, mainly on the back of the weak U.S. dollar and strong oil,” said Maarten-Jan Bakkum, a senior strategist at NN Investment Partners in The Hague, who favors shares in India and the Philippines. “Flows have clearly improved, Chinese risks are lower for the short term, but we do not see a convincing improvement in growth momentum yet.”

Brazil Rally

The MSCI developing-nation equity benchmark rose 0.8 percent to 830.88, taking its four-day gain to 2.7 percent. Gauges of raw-material and energy stocks rose the most, each increasing more than 1.8 percent.

The Ibovespa jumped 3.7 percent. A lower house committee voted in favor of Rousseff’s impeachment by a wider margin than originally forecast, setting the stage for a showdown when the full house convenes as early as Sunday to decide on the matter. The Brazilian equity benchmark has rallied 20 percent this year amid speculation that a new president will be better able to pull the country out of a recession forecast to be the worst in more than 100 years.

The Dubai Financial Market General Index rose 1.5 percent to a five-month high as Brent crude jumped 4.3 percent to $44.69 a barrel, the highest close since Nov. 27. The Bloomberg Commodity Index rose for a third day, climbing 2 percent.

Saudi Stocks

Saudi Arabia’s Tadawul All Share Index advanced 1.5 percent, led by banks and cement companies. Cement producers gained on optimism the government will lift an export ban. Saudi stocks maintained gains even after Fitch Ratings downgraded the country on concern lower oil prices will hurt the kingdom’s fiscal and external balances.

Anglo American Plc surged 9.2 percent in Johannesburg as De Beers increased diamond sales at its third offering this year in a sign of recovering demand for rough gems.

GS Engineering & Construction Corp. jumped 8 percent, leading gains in construction companies in Seoul, after NH Investment & Securities said an increase in home sales over the past two years will boost the South Korean contractor’s operating profit.

The Shanghai Composite Index fell 0.3 percent as Chinese Premier Li Keqiang said the world’s second-largest economy faces multiple difficulties.

Currencies, Bonds

The MSCI Emerging Markets Currency Index climbed 0.2 percent, extending its advance since April 6 to 1.2 percent. The gauge has risen more than 7 percent since mid-January. The Bloomberg Dollar Spot Index fell was little changed after two days of declines.

The ruble strengthened 1.7 percent, gaining for a third day. The Colombian and Chilean pesos each rose more than 0.9 percent.

Turkish 10-year government bonds rose for a second day, pushing the yield down 10 basis points to a nine-month low of 9.68 percent. The yield on similar-maturity Malaysian notes fell five basis points to a one-year low of 3.75 percent.

The premium investors demand to own emerging-market debt over U.S. Treasuries narrowed eight basis points to 402, according to JPMorgan Chase & Co. indexes.

— With assistance by Y-Sing Liau

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