Bloomberg News

Emerging Stocks Rise for Second Day on Europe, U.S. Data

November 29, 2011

Nov. 29 (Bloomberg) -- Emerging-market stocks rose for a second day for the longest streak of gains in two weeks as U.S. consumer confidence increased by the most since 2003 and European finance ministers reapproved a loan to Greece.

The MSCI Emerging Markets Index advanced 1 percent to 911.48 at 2:25 p.m. in New York, extending yesterday’s 2.8 percent increase, as technology and consumer shares rallied. Argentina’s benchmark rose 0.8 percent, while Mexico’s index gained 1.2 percent. Hungary’s BUX Index gained 0.7 percent. Taiwan and South Korean shares jumped more than 1 percent.

Stocks rose as Italy sold about 7.5 billion euros ($10 billion) of debt as demand for the 2014 bond was 1.5 times the amount sold, up from 1.35 times at the previous auction. Euro- area finance ministers reapproved a 5.8 billion-euro loan to Greece under last year’s bailout after eliciting budget- austerity pledges from Greek political leaders backing a unity government, a European official said.

“The EU summit next week is the big date on the agenda,” Benoit Anne, the London-based head of emerging-markets strategy at Societe Generale SA said in a phone interview. “G-10 economic news continues to be important, headline risk in Europe and the state of the U.S. economy are very significant barometers for global markets.”

MSCI’s emerging-markets index has slumped 21 percent this year as countries from China to Brazil raised interest rates to stem inflation and concerns grew over debt in Europe and U.S. economic growth. The MSCI gauge is valued at 11 times estimated earnings, compared with the four-year average of 12.2 times, according to data compiled by Bloomberg.

Hungary

Hungary’s BUX Index gained 0.7 percent after rising 2.2 percent yesterday, with Magyar Telekom Nyrt., the former phone monopoly controlled by Deutsche Telekom AG, rising 2.5 percent.

The country’s Magyar Nemzeti Bank increased the two-week deposit rate to 6.5 percent from 6 percent today. The forint dropped to its weakest ever against the euro this month and government bond yields soared over 9 percent for the first time in two years as the country on Nov. 24 lost its investment-grade rating at Moody’s Investors Service after 15 years.

The central bank may raise interest rates further if the country’s risk assessment and the inflation outlook worsen “persistently,” the bank said in a statement today.

Russia’s 30-stock Micex Index dropped 0.8 percent, reversing earlier gains. OAO Severstal, the country’s second- largest steelmaker, gained 3.7 percent.

The Czech koruna appreciated 0.7 percent and the Brazilian real rose 0.5 percent. Colombia’s peso depreciated 0.7 percent and the South African rand rose 0.4 percent.

Brazil, South Africa, China

The Bovespa fell 0.8 percent, reversing earlier gains. Tim Participacoes SA, the Brazilian unit of Italy’s largest phone company, advanced 0.6 percent after saying its board approved a long-term loan of 200 million euros from the European Investment Bank.

South Africa’s All Share index declined 0.6 percent as Moody’s said it was considering a downgrade of debt ratings for European banks, weighing on local banking stocks. Nedbank Group Ltd., the country’s fourth-largest lender by assets, slipped 2.9 percent. Naspers Ltd., Africa’s largest media group, slid 0.7 percent after the group said first-half profit declined 46 percent as development spending almost doubled.

Economic Growth

Chinese equities advanced after Citigroup Inc. analysts wrote in a report that the nation is expected to shift from fighting inflation to stabilizing economic growth, which could lead to more policy easing.

The Shanghai Composite Index advanced 1.2 percent, and Taiwan’s benchmark gauge increased 1.3 percent. South Korea’s Kospi rallied 2.3 percent.

Hyundai Heavy Industries Co. climbed 4.2 percent after the South Korean shipbuilder said it has received more orders. Acer Inc. rose 2.1 percent after the Taiwanese computer maker said it cut its inventory.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 5 basis points, 0.05 percentage point, to 432, 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 was little changed at 365, according to data provider CMA.

--Editors: Linda Shen, Ana Monteiro

To contact the reporters on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net; 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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