Bloomberg News

Emerging Stocks Rise, Complete Biggest Weekly Advance Since 2008

October 28, 2011

Oct. 28 (Bloomberg) -- Emerging stocks rose, completing the biggest weekly gain since December 2008, as Europe’s agreement to stem the debt crisis and speculation the U.S. economy is improving boosted the global outlook.

The MSCI Emerging Markets Index climbed 1.6 percent to 1010.12 at the close of trading, entering a bull market as the index rose 22 percent from an Oct. 4 low. The BSE India Sensitive Index jumped 3 percent as trading resumed following yesterday’s holiday, and bourses in Turkey and South Africa advanced. The benchmark indexes in Brazil and Chile both climbed for a third day.

The deal to boost Europe’s bailout fund and write down Greek debt was hailed by U.S. President Barack Obama as an “important first step” to resolve the crisis. Data today showed U.S. consumer spending accelerated last month after figures yesterday showed economic growth quickened last quarter.

“I strongly believe that the backdrop has fundamentally improved for risky assets,” Benoit Anne, the London-based head of global emerging-markets strategy at Societe Generale SA, said in an e-mail to clients today. “Of course this ultimately depends on the EU authorities keeping the momentum going.”

MSCI’s developing-nation index has jumped 9.8 percent this week, paring this year’s drop to 12 percent.

‘Opportunity’

Benchmark gauges of credit risk plunged globally yesterday after European leaders agreed to a rescue package. Greek Prime Minister George Papandreou said on television late yesterday the agreement is an “opportunity” and buys time for the nation to revamp the economy.

Asian currencies strengthened this week by the most in more than two years after European leaders agreed measures to tackle the debt crisis, led by South Korea’s won, which rose to a six- week high. Malaysia’s ringgit gained 2.6 percent, the Thai baht advanced 1 percent and Taiwan’s dollar appreciated for a fourth week.

Brazil’s Bovespa index gained 0.4 percent, capping its biggest weekly gain since May 2009, as meatpacker BRF Brasil Foods SA and clothing retailer Cia. Hering reached record highs after third-quarter profits topped analysts’ estimates.

Chile’s Ipsa increased 0.2 percent, following copper prices higher.

Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, rallied 2 percent in Hong Kong after saying third-quarter profit climbed 28 percent. Bank of Communications Co. added 2.1 percent on a 31 percent increase in third-quarter earnings.

Turkey, South Africa

Turkey’s main gauge advanced 0.8 percent, and South Africa’s All Share Index rose 1.4 percent.

U.S. spending rose 0.6 percent last month after a 0.2 percent gain in August, Commerce Department figures showed today in Washington. Incomes rose less than projected, sending the savings rate down to the lowest level in almost four years.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose six basis points, or 0.06 percentage point, to 371, according to JPMorgan Chase & Co.’s EMBI Global Index.

The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps rose 18 basis points to 271, according to data provider CMA.

--With assistance from Alexander Cuadros in Sao Paulo. Editor: Marie-France Han

To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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