Emerging Stocks Rise to 5-Week High After Greek Elections
Emerging-market stocks rose, driving the benchmark index (SENSEX) to a five-week high, as concern that Greece may be forced out of the euro eased.
The MSCI Emerging Markets Index advanced 1 percent to 934.06 by 4:31 p.m. in New York, the highest level on a closing basis since May 15. Redecard SA, Brazil’s second-biggest card- payment company, led technology shares higher after posting the sharpest increase in four months. The Bovespa rose to the highest since May 21 as Tam SA surged to a five-year high. The BSE India Sensitive Index lost 1.4 percent as policy makers left rates unchanged.
Most developing nations’ benchmark gauges advanced after Greece’s New Democracy and Pasok parties won enough seats in parliament to forge a majority government, reducing concern the country was headed toward an exit from the euro. Concern Europe’s debt crisis is deepening curtailed exports and foreign investments to emerging markets.
“Investors are feeling relieved that the worst case scenario in Greece is avoided,” said Chu Moon Sung, a Seoul- based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion. “Problems of Europe’s debt crisis and a slowing global economy are still there, and I think investors will keenly watch for governments’ stimulus measures as well as policy cooperation.”
The MSCI Emerging Markets gauge has added 1.9 percent in 2012 and trades at a multiple of 10.1 times estimated earnings, compared with 12 for companies on the developed-nation index, which has gained 2.5 percent this year, according to data compiled by Bloomberg.
All 10 industry groups on the MSCI Emerging Markets index (MXEF) gained, with technology, consumer discretionary and industrials leading the advance.
OAO Sberbank, Russia’s biggest lender, jumped 2.1 percent in Moscow, lifting the Micex Index by 1 percent to the highest level since May 11.
The Bovespa added 0.2 percent as Tam SA, Brazil’s biggest airline, rose 6.8 percent to the highest since December 2007.
Redecard added 5.2 percent after a second appraisal of Itau Unibanco Holding SA’s 11.8 billion-real ($5.7 billion) offer to take the company private showed it’s in line with a previous assessment.
Egypt’s EGX 30 Index of shares tumbled 3.4 percent after the military curtailed powers of the elected president, extending the benchmark’s drop from this year’s high on March 7 to 22 percent.
India’s central bank Governor Duvvuri Subbarao left the key repurchase rate at 8 percent today, a stance that contrasts with rate cuts in Australia and China the last two weeks.
Prime Minister Manmohan Singh is grappling with an economy hobbled by record trade and budget deficits, corruption scandals and infighting in the coalition that has stymied his efforts to lure more foreign investment.
The gauge had risen as much as 0.9 percent before the Reserve Bank of India left its main repurchase rate at 8 percent. Only four of 25 economists in a Bloomberg News survey predicted the central bank will leave rates unchanged, with 19 expecting a 0.25 percentage-point cut and the remainder a half- point reduction.
“This is a shocker,” said D.K. Aggarwal, who manages about $100 million of Indian assets as chairman of New Delhi- based SMC Wealth Management Ltd. “A rate cut was a must because the growth was slowing. The confidence has taken a beating.”
The State Bank of India (SBIN) and DLF Ltd., the country’s biggest developer, tumbled in Mumbai after the rate decision.
India’s sovereign credit outlook was lowered to negative from stable by Fitch Ratings, which cited the heightened risk of a deterioration in growth potential and limited progress on paring the nation’s budget deficit.
Poland’s WIG20 Index fell 0.2 percent in Warsaw while the FTSE/JSE Africa All Share Index (JALSH) rose 1.4 percent in Johannesburg. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong rose 0.8 percent.
Exporters led gains in Seoul, with a 2.1 percent advance for Samsung Electronics Co., (005930) Asia’s biggest maker of chips and flat screens. Hyundai Motor Co., South Korea’s biggest carmaker, added 3.5 percent. Taiwan’s Radiant Opto-Electronics Corp. (6176) surged 6.9 percent after the China Times reported Apple Inc.’s new MacBook will bolster the company’s sales.
Hon Hai Precision Industry Co., the world’s largest electronics maker, rose 2.4 percent to its highest since May 31. Gross margins will likely recover, said Terry Gou, chairman and founder of the company. He spoke at the annual shareholder meeting today in Taipei.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose four basis points, or 0.04 percentage point, to 386, according to JPMorgan Chase & Co.’s EMBI Global Index.