BS: Emerging Stocks Gain Most in Two Months as Commodities Climb
By Laura Cochrane
Feb. 3 (Bloomberg) -- Emerging-market stocks rose the most in two months, boosted by higher commodity prices and improved confidence in the global economic recovery after an increase in U.S. pending home sales.
The MSCI Emerging Markets Index jumped 1.8 percent to 957.11 at 11:16 a.m. in London, the steepest climb since Dec. 1. China’s Shanghai Composite Index added 2.4 percent and India’s Sensex Index advanced 2.1 percent for the biggest gains in six weeks. The Micex Index of stocks in Russia, the world’s largest energy exporter, jumped 1.2 percent.
Oil prices extended yesterday’s gain to a four-month high at $77.23 a barrel, boosting revenue for energy exporting economies. Materials and industrial companies led the rally in Asia after the U.S. National Association of Realtors said yesterday pending home sales rose 1 percent, adding to signs of growth in the world’s biggest economy.
“Investors are looking for reasons to flip their positions to positive and global growth prospects are providing that,” Michael Ganske, head of emerging-market research at Commerzbank AG in London, said in a phone interview. “Across the board markets are very strong. It’s very much connected to global growth and of course stronger commodities are always a reason for emerging-market progression.”
Cnooc Ltd., China’s biggest offshore oil producer, surged 10 percent for the steepest gain in more than a year after saying it plans to increase crude and gas output by as much as 28 percent. OAO Severstal, Russia’s largest steelmaker, climbed as much as 4.6 percent to a two-week high on plans to start deliveries for the East Siberia-Pacific Ocean pipeline in March. Kazakhmys Plc, Kazakhstan’s No. 1 copper producer, added 2.4 percent after it was given a new “buy” rating by UBS AG.
Ruble, Rand
OAO Uralkali, Russia’s second-largest potash producer, increased 5.2 percent, its biggest gain since Jan. 11, after it was raised to “buy” from “sell” at Citigroup Inc., which cited a recent increase in export prices for the fertilizer.
The ruble jumped to a two-week high against the dollar and euro, rising 0.8 percent to 29.88 per dollar. South Africa’s rand also climbed to its strongest level in two weeks, advancing as much as 0.7 percent to 7.4208 per dollar, as prices increased for gold and platinum, the nation’s biggest export earners.
The extra yield investors demand to own emerging-market dollar bonds instead of U.S. Treasuries dropped 5 basis points to a four-day low of 3.03 percentage points, after yesterday rising to a seven-week high, according to JPMorgan Chase & Co.’s EMBI+ Index.
Faber, El-Erian
Yields on Russian corporate bonds, which have more than halved in the past year, don’t compensate investors for the risks of the securities, investor Marc Faber, who publishes the Gloom, Boom and Doom report, said in an interview on Bloomberg Television from Moscow. The yields have dropped to 6.7 percent from 14.1 percent a year ago, according to JPMorgan’s CEMBI indexes.
Investors have wrongly priced in an “orderly” withdrawal of stimulus measures, a rebound in bank lending and coordinated government policy to restore growth, wrote El-Erain, whose firm runs the world’s biggest mutual fund.
Copper rallied as much as 1.7 percent to $6,933 a metric ton in London and nickel, lead, zinc and aluminum prices also gained. The MSCI World Index jumped 0.2 percent, extending the 36 percent rise over the past 12 months, and futures on the Standard & Poor’s 500 Index advanced 0.2 percent.
Romania’s central bank cut its benchmark interest rate by half a point for the second time this year, lowering borrowing costs to 7 percent, after the nation’s credit rating outlook was raised and optimism mounted that its International Monetary Fund bailout loan will be resumed. Credit-default swaps on Romanian government bonds fell 3.5 basis points to a one-week low of 242.5 basis points, according to CMA Datavision in London. The leu fell 0.2 percent to 4.0959 per euro.
Editors: Gavin Serkin, Claudia Maedler
To contact the reporter on this story: Laura Cochrane in London at +44-20-3216-4147 or lcochrane3@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at +44-20-7673-2467 or gserkin@bloomberg.net
