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Emerging-market stocks gained as Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed to increase job growth, fueling prospects extra cash on the market will boost emerging-market assets.
The MSCI Emerging Markets Index advanced 0.2 percent to 1,044.31 at the close in New York, led by consumer staples companies and energy producers. Marfrig Alimentos SA (MRFG3), Latin America’s second-largest beef producer, jumped the most in two weeks, leading Brazil’s benchmark Bovespa index to its largest gain since March 13. OAO Surgutneftegas (SNGS) had the biggest advance since March 11 in Moscow.
Continued accommodative monetary policy is probably needed to push the U.S. jobless rate lower, Bernanke said in a speech today. Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. German business confidence rose to an eight-month high in March, suggesting Europe’s largest economy will return to growth after manufacturing output contracted this month.
The expansion of central bank balance sheets and liquidity among developed countries “is going to continue to be a bullish factor for global markets, including emerging markets,” Nick Chamie, head of emerging markets at RBC Capital Markets in Toronto, said by phone. Merkel’s comments are “a bullish factor for global markets as well, insofar as that helps to reduce default risk perceptions in the euro zone.”
Emerging-market stocks have advanced 14 percent in 2012, poised for their best start to a year since 1992, when the benchmark MSCI Emerging Markets Index (MXEF) jumped 20 percent in the first quarter. Developed-nation shares have gained 12 percent. At 13.2 times estimated earnings, they remain more expensive than emerging-market equities, which trade for 10.7 times estimated earnings.
The iShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF that tracks developing-nation shares, jumped 1.8 percent to $43.66. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, slid 1 percent to 24.85.
Brazil’s Bovespa rose 1.3 percent, ending a four-day slide, after a report showed the country’s economy contracted 0.13 percent in January, less than economists had forecast. Marfrig advanced 5.2 percent. Petroleo Brasileiro SA (PETR4), known as Petrobras, gained 2.2 percent.
Mexico’s benchmark IPC stock index climbed 1.4 percent to a record as a pickup in the U.S. economy buoyed optimism in the outlook for its southern neighbor.
Surgutneftegas added 3.9 percent while Russia’s Micex Index jumped 1.6 percent.
Akbank TAS (AKBNK), Turkey’s second-biggest listed bank by market value, had its biggest drop since Feb. 23, slumping 3.3 percent, after Citigroup Inc. (C) said it will cut its stake in the lender to less than 10 percent from 20 percent. The sale is for “technical reasons” related to Basel III banking rules, Akbank said on March 23.
The BSE India Sensitive Index (SENSEX) dropped 1.8 percent as the rupee weakened to a 10-week low.
India’s government needs to take tough decisions in coming months and tap additional funds to bridge a budget deficit, Finance Minister Pranab Mukherjee said.
BYD Co. (1211), the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., tumbled 4.8 percent in Hong Kong after the company said first-quarter net income may plunge by as much as 95 percent. China Shanshui Cement Group (691) slumped 12 percent after reporting profit that missed estimates.
The Hang Seng China Enterprises Index (HSCEI) of Chinese stocks listed in Hong Kong slid 0.6 percent, its ninth consecutive decline and the longest losing streak since July 2010.
Taiwan’s Taiex Index (TWSE) slid 1.4 percent. South Korea’s Kospi Index (KOSPI) retreated 0.4 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell two basis points, or 0.02 percentage point, to 333 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
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