BLBG:Emerging Stocks Rise as Commodities Gain; Rupee Jumps on Tax Cut
Emerging-market stocks rose, paring the first weekly decline this month, as gains in commodities lifted producers and investors speculated losses were excessive given central bank stimulus measures.
The MSCI Emerging Markets Index increased 0.9 percent to 1,007.51 at 11:45 a.m. in London, trimming this week’s loss to 0.7 percent. India’s benchmark gauge jumped to a one-year high and the rupee rallied the most worldwide on tax cuts that added to policy reforms last week. Samsung Electronics Co. (005930) gained 1.2 percent in Seoul after a 3.7 percent slump the past four days. Russia’s ruble snapped a four-day decline as oil pared its biggest weekly drop in three months, and South Africa’s rand gained for the first time in three days on higher metals prices.
Stocks rebounded following the biggest decline since July yesterday when data signaled Chinese manufacturing probably contracted in September for an 11th month. Global equity funds lured the largest weekly inflows this year after the Federal Reserve and the European Central Bank announced plans to buy bonds to support growth, according to Citigroup Inc. Commodities rose, trimming the first weekly drop since July.
“The near-term burst of negativity has caused some jittery investors to push the sell trigger and now there are those taking advantage of this opportunity to add to their holdings,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. (BDO) “Some of the liquidity released by recent monetary easing will be plowed into emerging markets.”
Fund Inflows
Global equity funds lured the largest weekly inflows this year after the Federal Reserve and the European Central Bank announced monetary stimulus measures, according to Citigroup Inc. Stock funds attracted $17 billion in the week ended Sept. 19, while about $3.2 billion was invested in emerging funds, Citigroup analysts wrote in a report today, citing data compiled by EPFR Global.
The ruble gained 0.9 percent against the dollar and the rand strengthened 0.7 percent. The Standard & Poor’s GSCI gauge of 24 raw materials climbed 0.6 percent. Oil jumped 0.7 percent, snapping a four-day decline. Nickel, lead and zinc rose more than 1 percent. Russia is the world’s largest energy exporter, while metals and other commodities accounted for 45 percent of South Africa’s exports in 2011, according to government data.
MSCI’s developing-nations measure has rallied 6.4 percent this month, beating a 4.7 percent advance by the MSCI World Index of developed-country shares. The emerging-market gauge trades for 11.3 times estimated earnings, compared with the MSCI World’s 13.5 times.
Foreign Investment
The BSE India Sensitive Index (SENSEX) surged 2.2 percent, poised for its highest close since July 25, 2011. The rupee strengthened 1.6 percent against the dollar. Today’s tax cuts come after Prime Minister Manmohan Singh last week ended a 14- month freeze on diesel prices and opened retailing and aviation industries to foreign investments.
“This move by the Finance Ministry is welcomed by the market as the government is showing firm commitment in economic reform and rules out uncertainty over potential policy reversal,” Societe Generale SA strategists, including Wee-Khoon Chong in Hong Kong, wrote in an e-mailed note today.
Reliance Capital Ltd. (RCAPT) climbed 10 percent to the highest since April 3 in Mumbai. Reliance Infrastructure Ltd. (RELI) jumped 9.7 percent and GMR Infrastructure Ltd. rallied 11 percent. The shares led gains in the MSCI gauge for emerging markets.
Turkey’s ISE National 100 Index and the Prague Stock Exchange Index both rose 0.9 percent.
Isbank Rallies
Turkiye Is Bankasi AS (ISCTR), Turkey’s biggest bank by assets, rose the most in seven weeks, jumping 3.9 percent, after saying it will reduce the amount of money set aside to protect against losses from bad loans. Erste Group Bank AG, the Austrian bank traded in Prague, climbed 2 percent.
The Hang Seng China Enterprises Index added 1 percent in Hong Kong. South Korea’s Kospi index climbed 0.6 percent.
Samsung Electronics, the world’s largest maker of televisions and mobile phones, posted its biggest gain in a week. The stock, the MSCI Emerging Markets Index (MXEF)’s biggest member, slumped 2.1 percent yesterday, the most in two weeks.
China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, gained 3.9 percent. The Baltic Dry Index, a measure of commodity shipping costs, rose 4.6 percent yesterday to its highest close since Aug. 13.
To contact the reporters on this story: Ian Sayson in Manila at isayson@bloomberg.net; Chris Kay in Abuja at ckay5@bloomberg.net
To contact the editors responsible for this story: Darren Boey at dboey@bloomberg.net; Vernon Wessels at vwessels@bloomberg.net
