Emerging-market stocks rose to a one-week high as Federal Reserve Chairman Ben S. Bernanke reiterated willingness to take additional steps to boost growth and as China’s Commerce ministry said the nation’s economy will gain momentum.
The MSCI Emerging Markets Index (MXEF) added 0.7 percent to 933.14 as of 5:30 p.m. in New York after gaining as much as 0.9 percent earlier, its highest close since July 10. Cyrela Brazil Realty SA Empreendimentos e Participacoes, Brazil’s second-biggest homebuilder by revenue, led gainers on the Bovespa index and Light SA (LIGT3) jumped after Banco Itau BBA raised its recommendation. Russia’s Micex Index advanced as OAO MRSK Holding surged and the Hang Seng China Enterprises Index (HSCEI) rose the most since June 29.
Bernanke told Congress that progress in reducing U.S. unemployment is likely to be “frustratingly slow” and reiterated that the Fed is prepared to take further action to boost the recovery, stopping short of discussing specific steps. The International Monetary Fund cut its 2013 global economic growth forecast yesterday as Europe’s debt crisis prolongs Spain’s recession and slows expansion in emerging markets.
“Equity assets are trading along the lines that if we see deteriorating data, the Federal Reserve could eventually step in and accelerate the process toward a fresh quantitative easing,” Luis Costa, an emerging-market strategist at Citigroup Inc., said by phone from London. “Given the signs of slowdown from very important pockets of growth, the central banks’ role takes greater importance.”
MSCI’s index of developing nations has gained 3 percent since May as European policy makers work toward taming the region’s debt crisis. The gauge trades at a multiple of 10.2 times estimated earnings, compared with 12.3 for the MSCI World Index of developed nations, according to data compiled by Bloomberg.
The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM:US) tracking developing-nation shares, added 1.3 percent to $38.91. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, declined 7.3 percent to 24.70, its lowest since May 2.
Output at factories, mines and utilities in the U.S. rose 0.4 percent last month after a revised 0.2 percent drop in May that was larger than previously reported, Federal Reserve data showed today in Washington. Economists forecast a 0.3 percent gain. The consumer-price index was unchanged following a 0.3 percent drop in May, another report showed, a sign that inflation may stay subdued as Fed officials have predicted.
The Bovespa index added 1 percent as Cyrela climbed 5.5 percent to 13.92 reais and Light, a power utility, gained 5.3 percent to 24.23 reais after Banco Itau BBA raised its recommendation to the equivalent of buy from neutral, citing its valuation. The Micex (INDEXCF) Index rose 0.6 percent, led by a 5.7 percent surge in MRSK Holding, as the company proposed an 825 billion ruble ($25.4 billion) investment program through 2017.
The Shanghai Composite Index (SHCOMP) rose 0.6 percent from its lowest close since March 2009. Dubai’s benchmark stock index climbed 0.8 percent to the highest level in more than two months.
The BSE India Sensitive Index, or Sensex, gained less than 0.1 percent, snapping four days of retreats. The rupee rallied 0.4 percent against the dollar. Overseas funds bought Indian shares for a 10th straight day on July 13, data from the market regulator showed yesterday, the longest run of net purchases since March.
China Railway Group Ltd. (601390), the country’s biggest rail builder by market value, gained 5.9 percent after the railways ministry said it will increase investment. The government will boost this year’s railway infrastructure investment plan by 9 percent to 448.3 billion yuan ($70.3 billion), according to a July 6 statement posted on the website of a provincial office of the National Development and Reform Commission that cited the Ministry of Railways.
Dongyue Group (189), a maker of fluorochemicals, advanced 11 percent in Hong Kong after Barclays Plc rated the shares new overweight. Also in Hong Kong, China Shanshui Cement Group Ltd. (691) tumbled 11 percent after Deutsche Bank AG cut its share-price estimate by 23 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries slipped nine basis points, or 0.09 percentage point, to 345, according to JPMorgan Chase & Co.’s EMBI Global Index.
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