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

Emerging Valuations

Brazil’s real gained 0.4 percent against the dollar, the most in a week. The Russian ruble strengthened to 30.1730 per dollar in unofficial trading, up from 30.5580 yesterday. The currency closed at 30.4075 per dollar on Russia’s Micex Index Dec. 28. The Indonesian rupiah strengthened 1.5 percent against the dollar to lead gains in emerging market currencies.

The MSCI Emerging Markets Index rallied 15 percent last year, beating a 13 percent gain in the MSCI World Index, a measure of developed-nation stocks.

A gauge of technology companies equities in the developing- nations measure jumped 2.6 percent today to the highest level since April 2000. Largan Precision Co. Ltd. surged 6.9 percent, the most in a month to lead gains on the MSCI Emerging Markets Information Technology Index. The Taiwanese company’s revenue will be boosted by Apple Inc. and Chinese orders, Economic Daily reported, citing analysts.

The developing-nations index trades at 12.4 times estimated earnings, compared with the MSCI World’s multiple of 14 times, data compiled by Bloomberg show.

‘Risk-on’

The MSCI BRIC Index of Brazilian, Russian, Indian and Chinese shares has risen 22 percent from its June 4 low. A bull market is defined by a rally of 20 percent or more from a low. The Sensex has rallied 26 percent in that period, the most among the biggest emerging markets.

“The new year starts with a strong risk-on green light,” Benoit Anne, the head of emerging-market strategy at Societe Generale SA in London, said in an e-mailed note today. “There is significant scope for risky assets in emerging markets to perform strongly in the near term.”

Samsung Electronics added 3.6 percent, the biggest contributor to the MSCI Emerging Markets Index’s gain today.

China Pacific Insurance jumped 7.2 percent in Hong Kong, its fifth day of gains. The stock is among Credit Suisse’s top picks in China this year, analysts Vincent Chan and Peggy Chan wrote in a client note.

China International Marine Containers Group Co. Ltd., the world’s biggest container maker, jumped 13 percent to a record to lead advances in emerging market stocks.

Parkson Tumbles

Parkson Holdings Bhd. was the worst performer on the gauge, sinking 7.5 percent in its worst slump in four years. The stock jumped 9.2 percent on Dec. 31, taking its 14-day relative strength index level to 79.6, the highest since Nov. 5.

Innolux Corp. jumped 6.7 percent and AU Optronics Corp. soared 5.4 percent in Taipei. The two flat-panel companies will start mass production of AMOLED displays this quarter, according to the Economic Daily News today.

Anglo American Plc, ArcelorMittal South Africa Ltd. and BHP Billiton Ltd. climbed at least 5 percent in Johannesburg. PKN Orlen SA, Poland biggest oil refiner, climbed 5.1 percent.

The S&P GSCI Index of 24 commodities added 0.9 percent, with oil rising to the highest level since Oct. 18 and copper jumping 3.5 percent in London.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries narrowed 12 basis points, or 0.12 percentage point, to 253 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

Bloomberg News

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