Emerging-market stocks rose for the first time in four days as utilities rebounded and Alcoa Inc. (AA:US) predicted stronger demand in the biggest developing nations.
Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, rose in Hong Kong as Alcoa’s sales beat estimates. Guangzhou Automobile Group Co. (2238), a Chinese partner of Toyota Motor Corp. (7203), surged the most in 18 months after Credit Suisse Group AG forecast growth in China’s car market. Cia. Energetica de Sao Paulo, Brazil’s second-biggest power generator, rose the most in a month to lead gains on the Bovespa. Vakiflar Bankasi TAO (VAKBN) rose to the highest level since 2005 after UBS AG upgraded the Turkish lender.
The MSCI Emerging Markets Index added 0.3 percent to 1,073.03 in New York, led by utilities as Brazilian power producers recovered on speculation yesterday’s slump was overdone. Alcoa, the largest U.S. aluminum producer, said yesterday that growth in global demand for the commodity will recover to 7 percent in 2013 as China’s economy rebounds. Chief Executive Officer Klaus Kleinfeld also forecast increased consumption in Brazil, India and Russia. The iShares MSCI Emerging Markets Index (EEM:US) exchange-traded fund climbed 0.4 percent.
“Most people are comfortable with the story that China is starting to stabilize and turn up, which is supportive for emerging markets,” Win Thin, the global head of emerging- markets strategy at Brown Brothers Harriman & Co. in New York, said by phone today. “Between now and the end of the week we’ll have some pretty supportive China data that can keep the emerging markets story going.”
China will report tomorrow that exports probably rose 5 percent in December, according to the median of 40 economists’ estimates compiled by Bloomberg. Shipments from the world’s biggest exporting nation climbed 2.9 percent in November on an annual basis. Asia’s biggest economy probably expanded 7.8 percent in the fourth quarter, the median of 29 estimates collated last month showed, from 7.4 percent in the three months to Sept. 30. Gross domestic product data is scheduled to be released next week.
The iShares MSCI Emerging Markets Index (EEM:US) exchange-traded fund, the ETF tracking developing-nation shares, rose to $44.44, the biggest gain in a week. 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 2.2 percent, falling for a second day.
The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong rose 0.9 percent, the biggest gain in a week, while the Philippine Stock Exchange Index climbed 0.7 percent to close at a record. Thailand’s SET Index (SET) added 0.4 percent, the highest close since July 1995, while the baht climbed for a third day. The Bank of Thailand kept its policy interest rate unchanged for a second straight meeting.
“There is growing optimism that China’s economy has bottomed out and will become the main driver for the global economy,” Jintana Mekintharanggur, who helps oversee about $164 million as the director of equities investment at Manulife Asset Management Co. in Bangkok, said by phone. “This should benefit developing countries, which have relied on demand from China to boost exports of their commodity products.”
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. rose 1.2 percent, the first advance this week, led by solar stocks. China plans to add 10 gigawatts of solar power capacity this year, more than double its current level, the National Energy Administration said in a statement on its website Jan. 8.
Suntech Power Holdings Co. (STP:US), the world’s biggest solar-panel maker, surged 13 percent, while Trina Solar Ltd. (TSL:US), the nation’s third-biggest maker of solar panels, rallied to the highest level in five months.
Brazil’s Bovespa (IBOV) index added 0.7 percent as the MSCI Brazil/Utilities Index climbed 2.9 percent, the most since Nov. 23. The Ministry of Energy meet today to discuss reservoir levels and the risk of energy rationing, while the government is also considering granting loans to help utilities weather the rising costs through the BNDES development bank, said Nelson Leite, president of power distributors association Abradee.
Cesp, as Cia. Energetica de Sao Paulo is known, rose 6.7 percent after falling yesterday the most in six weeks amid concern that water levels at hydropower dams may lead Brazil to ration electricity. Centrais Eletricas Brasileiras SA, known as Eletrobras, jumped 4.3 percent, the most in a week.
A gauge of utility stocks was the best performer among the 10 industry groups in the MSCI Emerging Markets Index (MXEF), rising 1.3 percent to erase its drop for the week. China Longyuan Power Group Corp. (916) was the biggest gainer on the broader emerging market gauge, adding 9.6 percent after Deutsche Bank AG named the company as its top pick in wind energy on project diversification and liquidity in a report dated Jan. 7.
The Mexican IPC index rose 0.7 percent, the most in a week. Mexican inflation slowed to within the central bank’s target range in December for the first month since May, supporting economists’ expectations that policy makers will refrain from increasing interest rates this year.
Egypt’s EGX 30 Index advanced 1.1 percent to the highest level since October. Qatar said yesterday it doubled deposits at Egypt’s central bank, helping ease a currency crisis. Russia’s Micex (INDEXCF) Index added 0.1 percent following yesterday’s 2.7 percent rally.
Indonesia’s rupiah rebounded, rallying 1.7 percent against the dollar after touching a three-year low yesterday as the government said its failure to reach its spending target last year crimped economic growth. The Polish zloty strengthened against the euro, appreciating 0.8 percent to lead gains among eastern European currencies. Marek Belka, Narodowy Bank Polski governor, said the central bank may pause in its easing cycle after lowering interest rates today for a third month.
MSCI’s developing-nations measure has climbed 1.7 percent this month, trailing a 2.1 percent increase by the MSCI World Index (MXWO) of developed-country equities. The emerging-markets index trades for 11 times estimated profit, compared with the MSCI World’s multiple of 13.2, data compiled by Bloomberg show.
Credit Suisse initiated coverage of Chinese carmakers with an overweight rating, predicting in a report today that the passenger vehicle segment will grow between 8 percent and 10 percent in the next three-to-five years.
Guangzhou Automobile jumped 7.4 percent in Hong Kong, its biggest increase since June 2011. Dongfeng Motor Group Co. (489), which makes cars with Nissan Motor Co. (7201), climbed 2.3 percent, while BYD Co. (1211), a Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., surged 9.2 percent to the highest level since February 13, 2012. BYD’s American depositary receipts (BYDDY:US) rose 9.8 percent over the counter. One receipt equals two ordinary shares.
Aluminum Corp. (2600) rose 1.1 percent in Hong Kong. Shares of Alcoa fell 0.2 percent in New York today, earlier rallying as much as 2.5 percent, after the U.S. aluminum producer reported fourth-quarter sales of $5.9 billion, beating the $5.6 billion average of 11 estimates.
Zoomlion Heavy Industry Science & Technology Co., China’s second-biggest construction-equipment maker, slid 6.4 percent in Hong Kong, the biggest loser in MSCI developing-nation stock measure. Shares were suspended from trading yesterday. Zoomlion’s American depositary receipts fell (ZLIOY:US) 3.3 percent today after falling by the same amount yesterday in U.S. trading. One receipt equals 10 ordinary shares.
The Changsha, China-based company said yesterday that it doesn’t exaggerate earnings and that allegations about its financial information are “false, groundless and misleading.” The statement was in response to a Ming Pao Daily report based on an anonymous letter.
Vakifbank climbed 3.6 percent in Istanbul. UBS raised its recommendation to neutral from sell and increased its price estimate for the shares to 5.7 liras from 4.45 liras.
OAO Mechel, Russia’s biggest producer of coal for steelmakers, slid 2.3 percent, paring yesterday’s 7.1 percent rally. OAO Magnit, the largest food retailer by market value, lost 2.2 percent after climbing 3.9 percent yesterday.
Tata Motors Ltd. (TTMT) rose 4.2 percent in Mumbai to a record after Credit Suisse upgraded the stock to outperform, the equivalent of buy, from underperform.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose two basis points, or 0.02 percentage points, to 261, according to JPMorgan Chase & Co.’s EMBI Global Index.
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