Emerging Stocks Post Longest Run of Weekly Gains in 15 Months
January 30, 2012, 3:03 AM ESTBy Jason Webb
Jan. 27 (Bloomberg) -- Emerging-market stocks rose for a fourth week, extending their longest gaining streak since October 2010, as borrowing costs for indebted European nations fell and on signs the Chinese and U.S. economies will avoid a hard landing.
The MSCI Emerging Markets Index gained 0.2 percent to 1,016.61 today in New York, boosting its advance in the week to 2.2 percent. The gauge has advanced 11 percent in the past four weeks. Brazil’s Bovespa index rose 1 percent in the five days to today and is up 8.8 percent this month. South Korea’s Kospi Index has climbed 0.8 percent since Jan. 20, extending its advance this month to 7.6 percent.
Italy sold 8 billion euros ($10.6 billion) of 182-day bills at 1.969 percent today, the lowest level since May, easing concern that the debt crisis in Europe will spiral out of control. Data in the past two weeks showed orders for U.S. durable goods climbed in December more than economists forecast and Chinese retail sales increased the most in 11 months.
“Most recent data flows now suggest some stability in terms of European growth indicators, some modest improvement in U.S., China data,” Tim Ash, the head of emerging-market research at the Royal Bank of Scotland Group Plc, wrote in a report e-mailed to clients today. “The market seems more comfortable now with possible outcomes in the Greek saga.”
Retail sales in China, the world’s second largest economy, rose 18.1 percent in December from a year earlier, the most since January 2011, the statistics bureau said on Jan. 16. In the U.S., durable goods increased 3 percent last month, after rising 4.3 percent in November, the biggest back-to-back gains in almost a year, the Commerce Department said on Jan. 26.
Greek Deal
In Europe, Greece and its creditors are negotiating how to reduce the country’s borrowings. Authorities are “very close” to reaching an agreement on private-sector involvement in a Greek debt deal this month, European Union Economic and Monetary Affairs Commissioner Olli Rehn said today at the World Economic Forum in Davos, Switzerland.
The FTSE/JSE Africa All Share Index rose 0.6 percent this week in Johannesburg and Russia’s ruble-denominated Micex Index gained 1.1 percent in Moscow.
In Brazil, Banco do Brasil SA climbed 1.8 percent today, extending its gain this week to 3.6 percent, after a report showed that bank lending rose at its fastest pace in 29 months in December. Steelmakers Cia. Siderurgica Nacional SA fell 0.2 percent today, paring its advance this week to 2.2 percent, after metal prices dropped.
Hyundai Motor Co. lost 3.5 percent today in Seoul after Asia’s third-biggest automaker by market value reported fourth- quarter earnings that missed analyst estimates. The shares lost 4.7 percent in the week.
Rupee’s Surge
Markets in mainland China, Taiwan and Vietnam were closed for public holidays.
India’s rupee climbed to an 11-week high after the central bank eased cut reserve requirements for lenders by 50 basis points, or 0.5 percentage point, on Jan. 24 to support economic growth, prompting investors to boost holdings of local stocks and bonds.
The currency rose 1.6 percent today, extending its gain this month to 7.6 percent. The rupee is headed for the best month on record.
Overseas funds added $1.56 billion to investments in Indian stocks this month through Jan. 24 and boosted ownership of debt to a record $29.5 billion, exchange data show.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries was little changed at 408 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index. For the week, the so-called spread between the two narrowed five basis points, the data show.
--With assistance from Berni Moestafa in Jakarta and Ye Xie in New York. Editors: Marie-France Han, Emma O’Brien
To contact the reporter on this story: Jason Webb in London at jwebb25@bloomberg.net
To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net; Gavin Serkin at gserkin@bloomberg.net
