BLBG:Emerging-Market Stocks Rise On Higher Oil, China Growth Pledge
Emerging-market stocks rebounded from a five-month low as India’s first fuel-price increase in seven months and China’s pledge to look at policies favoring growth boosted energy and metals shares.
The MSCI Emerging Markets Index climbed 0.6 percent to 902.28 by 11 a.m. in London. The gauge sank 2.4 percent yesterday, the most in six months, as concern deepened that Europe’s debt crisis will reduce developing-nation exports and curb demand for riskier assets. Oil & Natural Gas Corp. (ONGC), India’s largest explorer, surged the most in seven months. OAO Tatneft (TATN), a Russian regional oil producer, jumped 4.8 percent after UBS AG raised the stock to neutral from sell.
China’s leaders pledged to intensify “fine-tuning” of policies in the second government statement in four days signaling a commitment to growth as domestic demand slows and Europe’s debt crisis escalates. Indian stocks rallied the most in Asia amid speculation the government will take more steps to curb the region’s worst current-account deficit after allowing the first increase in gasoline prices in almost seven months.
“It’s an opportunity” after the recent drop in developing-nation stocks, Geoffrey Dennis, global emerging- market strategist at Citigroup Inc. in New York, said in an interview on Bloomberg Television. “The market will go higher in the long term because the Chinese economy will get a lot better in the second half with policy easing.”
Relative Strength
The MSCI Emerging Markets Index (MXEF), down 1.5 percent this year, trades at 9.7 times estimated earnings, compared with 11.7 for the MSCI World Index (MXWO) of advanced nations, which has added 0.7 percent in 2012.
The developing-nation gauge’s 14-day relative strength index, which tracks momentum by comparing closing prices with daily trading ranges, was at 22.2 today, the twelfth day below 30. A reading of 30 or below is a signal some investors use to indicate prices may be about to rise.
South Africa’s FTSE/JSE Africa All Share Index (JALSH) jumped 0.4 percent, recovering from its biggest sell-off in seven weeks, as gold producers climbed the most in two months. AngloGold Ashanti Ltd. (ANG), the country’s biggest producer of the metal, rose 4 percent.
Hungary’s BUX Index (BUX) jumped 1 percent after its biggest fall in more than six months. OTP Bank Nyrt., the country’s largest lender rose 3 percent. The Czech Republic’s PX index and Turkey’s ISE National 100 Index added less than 0.1 percent.
China and India
The Shanghai Composite Index (SHCOMP) dropped 0.5 percent after a private survey showed the nation’s manufacturing may shrink for a seventh month. The 48.7 preliminary reading for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics today compares with a final 49.3 for April.
PT Bumi Resources (BUMI) in Indonesia led gains in Asian energy companies after crude oil recovered from a seven-month low amid speculation the drop was exaggerated and that China will accelerate efforts to spur growth. China Railway Group (390) jumped 2.4 percent in Hong Kong trading after the government said it will speed up building railways.
The BSE India Sensitive Index gained 1.7 percent, the steepest climb since March 30. Housing Development Finance Corp., the biggest mortgage lender, rallied the most in more than five months after index producer MSCI reversed a plan to change the weighting on the stock.
Finance Minister Pranab Mukherjee has pledged to restrict the subsidy program that spans diesel to fertilizers to less than 2 percent of gross domestic product this fiscal year as he tackles a shortfall in government finances. Standard & Poor’s last month lowered the nation’s rating outlook to negative from stable, citing slowing economic growth and a widening deficit.
The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps was unchanged at 335, according to data compiled by Bloomberg.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries declined three basis points, or 0.03 percentage point, to 404, according to JPMorgan Chase & Co.’s EMBI Global Index.
To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net Gavin Serkin at gserkin@bloomberg.net
