BLBG : Stocks Rise as Emerging-Market Valuations Reach Nine-Year High
Sept. 10 (Bloomberg) -- Stocks rose worldwide, driving the MSCI Emerging Markets Index to its most expensive level in nine years, as ASML Holding NV forecast higher sales of semiconductor equipment and Indian software makers rallied.
The MSCI Emerging Markets Index increased 0.8 percent at 9:58 a.m. in London, pushing valuations above 20 times reported earnings for the first time since June 29, 2000, according to data compiled by Bloomberg. The MSCI World Index of 23 developed nations climbed for a sixth day. Futures on the Standard & Poor’s 500 Index gained 0.2 percent. Crude oil advanced for a fourth day.
Amsterdam-based ASML, Europe’s largest maker of chip- manufacturing equipment, said customers resumed buying its machinery. Texas Instruments Inc. yesterday raised profit and revenue forecasts for the third quarter, while in Hong Kong, Li & Fung Ltd. President Bruce Rockowitz said in a Bloomberg Television interview his company, the biggest supplier of clothes and toys to Wal-Mart Stores Inc., sees a “more positive buzz” in the U.S.
“Valuations have been pushed up very aggressively,” said John Lomax, a London-based strategist at HSBC Holdings Plc. “The macro-economic context is generally pretty supportive.”
Emerging market shares have risen 53 percent this year as government stimulus packages, bailout loans and interest-rate cuts from Hungary to China fueled optimism that the worst of the financial crisis is over.
India, Abu Dhabi
Infosys Technologies Ltd., India’s second-largest software services provider, rose to its highest since 2007 after Nomura Holdings Inc. said it’s now “neutral” on the industry given the outlook for growth in the U.S. and Europe, an improvement in spending and expanding operating margins. Nomura previously had a “bearish” rating.
The ADX General Index of stocks in Abu Dhabi, the holder of the world’s sixth largest crude reserves, jumped 1.9 percent to the highest in 10 months. Indexes in Hungary, Poland, South Africa, Romania, Lithuania and Bulgaria rose more than 1 percent.
Bank of China Ltd., which led the nation’s $1.1 trillion lending spree in the first half, said ample liquidity has caused “bubbles” in stocks, commodities and real estate. “You see asset bubbles in commodities, stocks and real estate, not only in China, but everywhere,” Vice President Zhu Min said in an interview in Dalian today.
‘Markets Vulnerable’
“Many investors are now concerned that global emerging market valuations are stretched, leaving the markets vulnerable,” Jeffrey Palma, a Stamford, Connecticut-based global equity strategist at UBS AG, wrote in a research note. “We find that current valuations still imply relatively modest long-term growth rates.”
The Dow Jones Stoxx 600 Index of European shares climbed 0.3 percent, led by technology companies. The regional gauge, which has surged 52 percent since March 9, is valued at 46.5 times profit, the highest level since 2003, according to weekly data compiled by Bloomberg.
ASML gained 6.4 percent in Amsterdam. STMicroelectronics NV, Europe’s biggest semiconductor maker, rose 3.1 percent, while Elpida Memory Inc., Japan’s largest computer memory maker, added 3.4 percent.
The gain in U.S. index futures indicated the S&P 500 may rise for a fifth straight day. The MSCI Asia Pacific Index rallied 1.5 percent to a one-year high today.
Li & Fung, Yurun
Li & Fung gained 5 percent in Hong Kong. China Yurun Food Group Ltd., the country’s largest hog processor, added 7.4 percent in Hong Kong after its first-half profit rose 37 percent.
Crude for October delivery in New York rose 1.2 percent to $72.13 a barrel as the International Energy Agency raised its global oil demand forecast for next year for a second month and OPEC agreed to maintain output targets.
Industrial metals fell in London on concern that stockpiles are growing. Lead fell 6.2 percent to $2,250 a metric ton, the biggest decline in almost two months.
The pound dropped against the dollar and the euro before the Bank of England decides whether to pause its 175 billion- pound asset-buying program following an interest-rate meeting today.
The Dollar Index fell for a fifth day, the longest sequence of declines since May, as Treasuries slipped before a $12 billion sale of 30-year bonds today. The yield on the benchmark note maturing in 2039 rose 1 basis point to 4.34 percent.
Emerging-market bonds rallied, pushing borrowing costs to the lowest in a month. The extra yield investors demand to own developing nations’ bonds instead of U.S. Treasuries fell 3 basis points to 3.48 percentage points, the lowest since Aug. 10, according to JPMorgan Chase & Co.’s EMBI+ Index. Indian bonds’ yield over Treasuries narrowed 6 basis points to 2.95 percentage points.
