Emerging Markets Rally for Fifth Day as U.K. Votes in Referendumby
Currency gauge rises to seven-week high amid Brexit vote
Sovereign-bond premium for developing nations narrows
Emerging-market stocks rose for a fifth day and currencies strengthened to a seven-week high as two polls conducted before Thursday showed a lead for the campaign to keep Britain in the European Union.
Petroleo Brasileiro SA, the Brazilian state-controlled oil company, helped drive the Ibovespa’s sixth advance in seven days as Brent crude ended a two-day drop. Poland led eastern European markets higher. Nigerian equities climbed to the highest level since September, extending gains since the nation’s currency was floated on June 20. Russia’s ruble strengthened the most among developing-nation currencies. The premium investors demand to own developing-nation sovereign debt rather than U.S. Treasuries narrowed for a fifth day.
Emerging markets have a lot at stake in the British referendum since countries in developing Europe receive financial support from the EU, while nations including South Africa and Turkey count the U.K. among their biggest trading partners. In two opinion polls conducted June 21-22, the “Remain” camp was shown to be in front. Dovish remarks by Federal Reserve Chair Janet Yellen this week and oil selling for more than $50 a barrel have supported risk sentiment.
“For investors, today is the last moment to join the possible emerging-market fireworks before the U.K. vote is decided,” said Vladimir Miklashevsky, a senior strategist at Danske Bank A/S in Helsinki, who favors currencies in Russia, Poland, Mexico, Hungary and India.
The MSCI Emerging Markets Currency Index rose 0.4 percent to the highest closing level since May 2. The Russian ruble and the Mexican peso each added more than 1.3 percent. South Africa’s rand strengthened to a seven-week high.
The Philippine peso declined 0.1 percent. The nation’s central bank held its benchmark rate at 3 percent on Thursday as predicted by all 17 economists surveyed by Bloomberg.
The Malaysian ringgit rose 0.4 percent to the strongest since May 9, data from local banks compiled by Bloomberg show. Malaysia will extend trading hours on Friday, when results from the U.K. referendum are due.
The MSCI Emerging Markets Index rose 0.7 percent to 835.43 in its longest winning streak in two weeks. All 10 industry groups advanced, led by financial and raw-material stocks. The developing-nation gauge trades at a valuation discount of 25 percent to advanced-country equities, compared with an average of 27 percent in the past 12 months.
The Ibovespa gained 2.8 percent in Sao Paulo. Petrobras was one of the biggest contributors to the index’s advance as oil rose 2.1 percent to $50.91 a barrel in London. Steelmakers Cia. Materials companies account for 22 percent of the Brazilian equity benchmark’s weighting.
The Prague Stock Exchange added 1.4 percent, rising for a fifth day in its longest winning streak since December. Turkey’s benchmark gauge rose 0.9 percent.
The premium for emerging-market debt narrowed nine basis points to 380, according to JPMorgan Chase & Co. indexes.