Emerging-market stocks rose from a three-week low after residential real estate prices in the U.S. fell less than expected, overshadowing concern about Europe’s debt crisis and a EU summit starting June 28.
The MSCI Emerging Markets Index (MXEF) added 0.3 percent to 906.85 by the close in New York, snapping a three-day drop and rising from the lowest level since June 6 yesterday. Telecommunication companies led the advance as OAO Rostelecom (RTKM), Russia’s dominant fixed-line phone company, surged 1.9 percent to lift Russia’s Micex Index from a three-week low. Oi SA (OIBR4) rose in Sao Paulo while Cia Hering tumbled.
The S&P/Case-Shiller index of property values in 20 U.S. cities dropped 1.9 percent in April from the same month in 2011, the smallest decline since November 2010. The median forecast was for a 2.5 percent drop. European Union leaders will hold a two-day summit to find a solution to the debt crisis. Brent oil in London advanced for a third day.
“The Case-Shiller numbers are supporting the positive market trend for today and fit in with the general picture that the U.S. is doing better,” Daniel Lenz, the emerging markets chief strategist at DZ Bank AG in Frankfurt, said by phone today. “Markets like when things are a little better than expected. There is also some hope ahead of the summit, though we don’t expect a huge breakthrough.”
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF tracking (EEM:US) developing-nation shares, rose 0.9 percent to $37.41.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, dropped 1.6 percent to 29.22.
The MSCI Emerging Markets Index has slumped 13 percent this quarter on concern Europe’s debt crisis is escalating. The gauge trades at 9.9 times estimated earnings, compared with an 11.8 multiple for the MSCI World Index of developed nations, according to data compiled by Bloomberg.
Consumer confidence in the U.S. dropped for a fourth straight month, to 62 from a revised 64.4 in the prior month, figures from the Conference Board, a New York-based private research group, showed today. The median forecast of economists surveyed by Bloomberg News called for a reading of 63.
The Micex Index (INDEXCF) gained 1 percent in Moscow, with Rostelecom gaining the most in a week, while the Bovespa added 0.1 percent, paring earlier losses.
Oi SA, Brazil’s telecommunications regulator, added 5.3 percent in Sao Paulo. Clothing retailer Cia Hering tumbled 7.7 percent, the most since Sept. 22, and was the biggest decliner on the index.
PGE SA (PGE) climbed 2.1 percent in Warsaw after Bank of America Corp. upgraded the shares to neutral from underperform. The WIG20 Index rose 2 percent to snap a four-day decline.
Hungary’s BUX Index gained 0.6 percent after German consumer confidence topped forecasts.
A measure of telecommunication service operators in the MSCI Emerging Markets Index climbed 0.9 percent, the best performer of 10 industry groups today.
“We are still in a critical period with lingering concern over China’s economic slowdown and Europe’s debt problem,” said Saharat Chudsuwan, chief investment officer at Bangkok-based Tisco Asset Management Co., which manages about $4.7 billion. “It’s a global theme for equity investors to switch to less risky stocks such as telecommunication and health-care companies.”
China Telecom Corp. (728), the country’s biggest fixed-line carrier, climbed 1.5 percent in Hong Kong, advancing for the first time in six days as some investors favored companies with domestic revenue. SK Telecom Co., South Korea’s largest mobile- phone operator, added 1.7 percent.
South Africa’s FTSE/JSE Africa All Share Index (JALSH) advanced 0.1 percent, snapping three days of declines.
Absa Group Ltd. (ASA), the South African bank controlled by Barclays Plc, dropped 8.3 percent, the most since 2002, after the lender said first-half earnings before one-time items declined as much as 10 percent as bad loans increased.
Vietnam’s VN Index slid 1.2 percent while Taiwan’s Taiex Index (TWSE) dropped 0.4 percent. The Philippine Stock Exchange Index (PCOMP) gained 0.5 percent. Economic expansion this quarter may be robust due to services and agriculture sectors, Economic Planning Secretary Arsenio Balisacan told reporters in Manila today.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped three basis point, or 0.03 percentage point, to 388, according to JPMorgan’s EMBI Global Index.
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