Emerging stocks jump as BRICs set for bull market on U.S. budget

Developing-nation stocks rose to a 10-month high, pushing the MSCI BRIC Index of the largest emerging markets up 22 percent from last year’s low, after U.S. lawmakers passed a bill that averted spending cuts and tax gains that had threatened the world’s largest economy.

Samsung Electronics Co., the world’s biggest maker of televisions and mobile phones, rallied 3.6 percent to a record, pushing an index of emerging-market technology stocks to the highest in more than 12 years. China Pacific Insurance (Group) Co. jumped to a 17-month high after Credit Suisse Group AG included the stock among its 2013 top picks. Brazil’s Bovespa Index surged to the highest since April, boosted by Braskem SA, while while Russia’s ruble climbed 1.3 percent in over-the- counter trading.

The MSCI Emerging Markets Index jumped 2.1 percent to 1,077.53 by 2:33 p.m. in New York, set for the highest close since March 2. The MSCI BRIC Index rose 2.5 percent, poised to close in a bull market. The House of Representatives voted in favor of budget legislation as Republican lawmakers abandoned efforts to add spending cuts to the bill, boosting confidence in the U.S. economy. The 21 nations in the developing-nations gauge send about 17 percent of their exports to the U.S. on average, data compiled by the World Trade Organization show.

“The fiscal cliff was one of the big drags on the market at the end of the last year, so I suspect that for the next few days and weeks we’re going to see markets run up further,” Neil Shearing, the chief emerging markets economist at Capital Economics Ltd., said by phone from London.

ETF Surges

The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, jumped 1.6 percent to $45.08, headed for the strongest close since August 2011. The ETF will see more inflows after the amount of shares outstanding reached a record last week according to Marketfield Asset Management LLC. Outstanding shares rose to an all-time high of 1.11 billion by Dec. 28, data compiled by Bloomberg show.

The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, dropped 7.1 percent to 20.15 in the biggest slump since Nov. 19.

The Mexico IPC Index rose 1.2 percent to a record. Brazil’s Bovespa rallied 2.7 percent to the highest level since April 19 as commodity prices boosted the outlook for the country’s biggest companies. Iron-ore producer Vale SA jumped 4.6 percent, while oil producer OGX Petroleo e Gas Participacoes SA climbed 8 percent.

Braskem, Latin America’s largest petrochemical maker, surged 6.6 percent in Sao Paulo after selling Brazilian assets for a total of 652 million reais ($319.6 million).

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