Bloomberg News

Emerging-Market Stocks Climb to 6-Month High on Greek Prospects

February 09, 2012

Feb. 8 (Bloomberg) -- Emerging-market stocks gained, poised for a six-month high, as Greek leaders worked on an austerity package needed to qualify the debt-ridden nation for a second rescue package.

The MSCI Emerging Markets Index rose 1.2 percent to 1,061.43 by 10 a.m. in New York, headed for the highest close since Aug. 4. Brazil’s Bovespa Index touched a nine-month high and the Shanghai Composite Index advanced 2.4 percent, while Taiwan’s Taiex Index climbed 2.1 percent. Russia’s Micex Index gained for the first day this week as UBS AG upgraded the country’s equities to “overweight.”

Greek Prime Minister Lucas Papademos will meet with the nation’s political leaders in Athens today to discuss terms required for a 130 billion-euro ($172 billion) bailout. German Chancellor Angela Merkel’s government is preparing plans for parliamentary votes on the package as soon as next week, said Michael Meister, deputy floor leader of Merkel’s Christian Democratic Union.

“Investors hope that confidence about an imminent Greek debt restructuring deal can be sustained or even validated today,” Chris Weafer, chief strategist at Moscow-based investment bank Troika Dialog, wrote in an e-mailed report.

Papademos yesterday held an unscheduled meeting with the so-called troika, comprising the European Commission, the European Central Bank and the International Monetary Fund, to put the final touches on the aid package. At stake is whether Greece wins the bailout, secures a debt write-off with private creditors and remains in the euro region. The impact of a Greek exit from the euro would be “incalculable,” Merkel said yesterday.

Chinese Inflation

China Petroleum & Chemical Corp. and PetroChina Co. both jumped 1.7 percent in Shanghai after the government raised domestic fuel tariffs for the first time in 10 months.

Chinese consumer prices probably rose 4 percent in January, down from a 4.1 percent gain in December, according to 33 economists’ estimates compiled by Bloomberg. Inflation may slow to as low as 3.2 percent in February from a three-year high of 6.5 percent in July, Bank of America Corp. said.

The Bovespa rallied as much as 0.7 percent to 66,383.21, the highest intraday level since May 2, after slower-than- forecast inflation data spurred bets that policy makers will continue to cut key borrowing costs.

Consumer prices as measured by the IPC-S index rose 0.46 percent in the 30 days through Feb. 7, from 0.81 percent in the previous period, the Getulio Vargas Foundation said today. That was less than the 0.65 percent median estimate of 21 economists surveyed by Bloomberg.

Russia ‘Overweight’

The Micex Index added 0.4 percent, led by United Co. Rusal as Deputy Chief Executive Officer Oleg Mukhamedshin said demand for aluminum will continue to increase as manufacturers switch to the light metal.

UBS raised its recommendation on Russia stocks to “overweight” as investors return to assets perceived as posing higher risk and the shares trade at a discount to global markets, analyst Nicholas Smithie wrote in an e-mailed report. The report didn’t detail the previous recommendation.

The ISE National 100 Index climbed 1 percent in Istanbul. Gains on the Turkish market were led by Gozde Girisim Sermayesi Yatirim Ortakligi AS, a private equity firm owned by Yildiz Holding AS, which jumped as much as 9.7 percent after saying it will conclude acquisitions worth as much as $1 billion each year.

The BUX Index gained 0.6 percent in Budapest and the PX Index jumped 1.7 percent in Prague, led by a surge of as much as 6.7 percent in shares of Erste Group Bank AG. Goldman Sachs Group Inc. raised its target price for the lender’s Vienna- traded shares.

Vietnam’s VN Index moved 2.1 percent higher and the Kospi Index rose 1.1 percent in Seoul.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell one basis points, or 0.01 percentage point, to 384, according to JPMorgan Chase & Co.’s EMBI Global Index.

--With assistance from Zachary Tracer in New York. Editors: Ash Kumar, Emma O’Brien

To contact the reporters on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net; 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


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