Bloomberg News

Emerging-Market Stocks Gain Most in Two Weeks on U.S.

March 27, 2012

Emerging-market stocks advanced for a third day as data showed consumer confidence in the U.S. held near a one-year high in March and after the Federal Reserve signaled it favors monetary easing.

The MSCI Emerging Markets Index (MXEF) added 1.1 percent to 1,055.42 at the close in New York, the biggest jump since March 13, led by technology and industrial companies. Samsung Electronics Co. (005930) rose the most in two weeks to a record high in Seoul. China Cosco Holdings Company Ltd. (1919) gained the most in two months, leading advances among Chinese shippers, after Credit Suisse said the stocks are cheap. The Hang Seng China Enterprises Index (HSCEI) rose for the first time in ten days.

Confidence among U.S. consumers held close to the highest level in a year in March and a measure of South Korean consumer confidence reached a four-month high. Continued accommodative monetary policy is probably needed to push the U.S. jobless rate lower, Federal Reserve Chairman Ben S. Bernanke’s Bernanke said yesterday.

The U.S. economy is “improving and it will continue to improve at a moderate pace,” Tim Hall, who manages $700 million at Deltec Asset Management in New York, said by phone. “The expectations have increased as people are feeling a little bit better about the U.S. economy.”

Emerging-market stocks have gained 15 percent this quarter, heading for their best start to a year since 1992. The MSCI World (MXWO) Index of developed-nation shares has gained 12 percent, to trade for 13.2 times estimated earnings. That’s more expensive than emerging-market equities, which trade for 10.8 times estimated earnings.

ETF Drops

The iShares MSCI Emerging Markets Index exchange-traded fund (EEM:US), the most-traded ETF that tracks developing-nation shares, lost 0.5 percent to $43.42. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, rose 3.1 percent to 25.63.

“Confirmation of the U.S. getting back on track is always very good news in my book,” Benoit Anne, chief emerging-market strategist at Societe Generale SA, said by phone from London. “The Fed was coming to the rescue of global sentiment, with Bernanke’s reiteration of a dovish role.”

Cia. Paranaense de Energia, the largest electricity distributor in Brazil’s southern region, slumped 3.5 percent, the biggest one-day loss since October, after reporting 2011 adjusted net income that fell short of analysts’ estimates. The benchmark Bovespa stock index fell 1 percent.

South Korea, Thailand

The Bank of Korea said today consumer confidence in South Korea rose to a four-month high of 101 in March, buoyed by signs of improvement in the U.S. and progress in containing Europe’s sovereign debt crisis.

South Korea’s Kospi Index (KOSPI) gained 1 percent, the most since March 13, and Thailand’s SET Index (SET) increased 1.6 percent.

Taiwan Semiconductor Manufacturing Company Ltd., (2330) the world’s largest contract maker of chips, rose 2.6 percent in Taipei trading. Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, gained 2.8 percent.

Russian stocks fell for the first time in three days, slumping 0.7 percent, as United Co. Rusal (RUALR), the world’s biggest aluminum producer, dropped for a fourth day.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage point, to 340, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Zachary Tracer in New York at ztracer1@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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Companies Mentioned

  • EEM
    (iShares MSCI Emerging Markets ETF)
    • $43.89 USD
    • -0.05
    • -0.11%
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