Bloomberg News

Emerging Stocks Rebound as U.S. Home Sales Boost Riskier Assets

April 24, 2012

Emerging-market stocks rebounded from their steepest drop in almost three weeks, with Hungarian equities leading gains, as rising new home sales in the U.S. boosted the global outlook and appetite for riskier assets.

The MSCI Emerging Markets Index rose 0.3 percent to 1,011.13 in New York as telecommunication services and consumer companies lead the gauge’s advance. Tata Consultancy Services Ltd. (TCS), Asia’s largest computer services provider by market value, surged the most since July 2009. Hungary’s BUX Index jumped the most since February, while Brazil’s Bovespa Index rose for the first time in four days.

Sales of new homes in the U.S. in March climbed more than the median in a Bloomberg survey of economists, while an index of leading Chinese indicators gained a preliminary 0.8 percent from the previous month, data today shows. Confidence among U.S. consumers was little changed in April from the previous month, according to a Conference Board index.

“A string of better than expected data is going to flip the switch and put investors in more of a tolerant mood for taking on emerging-market risk,” said Ed Kuczma, an emerging market analyst at Van Eck Associates in New York.

The MSCI Emerging Markets Index (MXEF) fell 1.3 percent yesterday, the most since April 4. The benchmark has climbed 10 percent this year, while the MSCI World Index added 7.5 percent. Companies on the gauge of developing nations are valued at 10.5 times estimated profits, compared with the MSCI World’s multiple of 12.3 times.

Brazil, Russia

The IShares MSCI Emerging Markets Index exchange-traded (EEM:US) fund, the most-traded ETF to track developing-nation shares, rose 0.2 percent to $41.61 in New York.

The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, declined 3.5 percent to 26.24 after jumping 7.4 percent yesterday.

Brazil’s Bovespa rose 0.7 percent in Sao Paulo, with 44 companies advancing and 22 falling. Fibria Celulose S.A. and Oi S.A. climbed more than 6.6 percent to lead gains while freight transporter All American Latina Logistica fell 2.3 percent.

Russia’s Micex Index fell 0.6 percent in Moscow with declines led by United Co. Rusal, the world’s biggest aluminum supplier. Mosenergo, the Russian capital’s biggest power supplier, climbed 4.7 percent, the most since August 2011.

Hungary Leads Gains

The BUX Index (BUX) gained 2.1 percent for its biggest gain in two months as Hungary is near a “breakthrough” in its campaign to convince the European Union and the International Monetary Fund to allow stalled bailout talks to proceed, Prime Minister Viktor Orban said.

The FTSE/JSE Africa All Shares Index (JALSH) gained 0.4 percent in South Africa while the ISE National 100 Index (XU100) fell 0.7 percent in Istanbul as trading resumed following a holiday yesterday. The WIG20 Index (WIG20) jumped 0.6 percent in Warsaw.

The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong gained 0.3 percent and the Shanghai Composite Index (SHCOMP) was little changed with 317 companies gaining and 633 retreating.

South Korea’s Kospi Index (KOSPI) dropped 0.5 percent while Taiwan’s Taiex Index (TWSE) added 0.2 percent.

The Sensitive Index, or Sensex, gained 0.7 percent in Mumbai as Tata Consultancy Services jumped 12.2 percent after it said net income rose 23 percent to 29.3 billion rupees ($556 million) in the three months ended March 31. The median of analysts’ estimates compiled by Bloomberg was profit of 28.3 billion rupees.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell seven basis points, or 0.07 percentage point, to 353, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Christine Harvey in New York at charvey32@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net

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


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Companies Mentioned

  • EEM
    (iShares MSCI Emerging Markets ETF)
    • $41.5 USD
    • -0.85
    • -2.05%
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