Bloomberg News

Emerging-Market Stocks Rise as Investors Await Greek Debt Deal

January 24, 2012

Jan. 23 (Bloomberg) -- Emerging-market stocks rose for a fifth day as Germany and France said Greek debt-swap talks are making progress.

The MSCI Emerging Markets Index gained 0.5 percent to 999.64 at the close in New York. The PX Index increased 2.3 percent in Prague as Erste Group Bank AG surged as much as 13 percent. South Africa’s benchmark gauge rose for a sixth day. Moscow’s Micex Index and the ISE National 100 Index in Istanbul each gained 0.5 percent. Brazil’s Bovespa advanced for a sixth day.

European Union finance ministers met in Brussels today to discuss budget rules, a financial firewall to protect indebted states and a Greek debt swap, with leaders racing to put together a firm rescue response in the coming weeks. Negotiations on Greek debt are making “tangible progress,” French Finance Minister Francois Baroin told reporters in Paris. German Finance Minister Wolfgang Schaeuble said he expects talks on the fiscal compact to be completed this month.

“We are clearly at a moment of truth for Greece,” Thomas Costerg, an economist at Standard Chartered Bank in London, said on Bloomberg Radio. “They are now close to an agreement, so that is a positive.”

Negotiators for Greece and the Institute of International Finance broadly agreed on the terms of a debt swap over the weekend, FT Deutschland said, citing unidentified government officials.

The MSCI Emerging Markets Index has gained 9 percent this month, on track for its best January performance since 2006. The gauge trades for 10.1 times projected earnings, compared with a 12.1 multiple for developed-market stocks.

Erste Jumps

Shares in Erste surged in Prague as Goldman Sachs said in a note to clients that the decline in the company’s valuation to roughly equal to that of Komercni Banka AS is an “abnormality” that underlines its “buy” rating.

The Bovespa rose 0.1 percent, led by oil company Petroleo Brasileiro SA. Petrobras gained 3.8 percent after saying it plans to replace its chief executive officer.

The ruble strengthened 1.5 percent against the dollar as oil rose. The forint appreciated 1.2 percent against the euro.

Hungary may obtain a loan from the International Monetary Fund and the European Union by March or April, Mihaly Varga, Prime Minister Viktor Orban’s chief of staff, told TV2 in an interview today.

The extra yield investors demand to own emerging-market debt instead of U.S. Treasuries fell six basis points, or 0.06 percentage point, to 407 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

Markets in China, Hong Kong, Indonesia, Malaysia, Philippines, South Korea, Singapore and Taiwan are closed today for holidays.

--Editors: Linda Shen, Glenn J. Kalinoski

To contact the reporters on this story: Jason Webb in London at jwebb25@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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