Bloomberg News

Emerging-Market Stocks Advance as Stronger Yen Boosts Exporters

May 20, 2013

Emerging-market stocks advanced to a one-week high as a stronger Japanese currency lifted global exporters. The Jakarta Composite Index (JCI) surged to a record.

Hyundai Motor Co. gained 1.3 percent as a rising yen eased concern about loss of competitiveness to Japanese rivals. China Resources Land Ltd. (1109) and Guangzhou R&F Properties Co. paced gains in Chinese developers in Hong Kong, adding at least 3.7 percent. PT Telekomunikasi Indonesia, the nation’s biggest phone operator, jumped to a five-year high. African Bank Investments Ltd. plunged 17 percent in Johannesburg, while Turkish shares led losses among major developing-nation gauges.

The MSCI Emerging Markets Index added 0.2 percent to 1,048.15. The yen rebounded from the weakest level since October 2008 as Japan’s economy minister expressed concern about its slide. China’s new-home prices rose last month in 68 of 70 cities tracked by the government, indicating Premier Li Keqiang will need to maintain efforts to cool the property market even as economic growth slows.

While the yen could continue to fall, it “has some breathing time,” Martin Schulz, head of international equities at PNC Capital Advisors LLC in Cleveland, said by phone. His firm manages about $35 billion. “The big risk in China is still what the government is going to do, because every time the prices go up, they plug in some type of regulatory clampdown. Near term, it’s a good sign that prices are up.”

Energy and technology shares had the biggest gains in the developing-nations gauge. The broad measure has lost 0.7 percent this year, compared with a 13 percent increase in the MSCI World Index.

Emerging ETF

The iShares MSCI Emerging Markets Index exchange-traded fund gained 0.3 percent to $43.53. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, dropped 1.8 percent to 18.

Brazil’s Ibovespa rose a second day as iron-ore producer Vale SA followed commodities higher, jumping 3.8 percent. Gafisa SA led losses by homebuilders as economists covering Brazil reduced their growth forecasts to less than 3 percent, the lowest among the largest emerging markets. Mexico’s IPC Index retreated 1.7 percent.

The Micex Index (INDEXCF) added 0.4 percent in Moscow after losing 1.7 percent last week. VTB Group, Russia’s second-biggest lender, climbed 3.5 percent.

The Borsa Istanbul Stock Exchange National 100 Index slumped 1.9 percent, the most since Feb. 21. Dogus Otomotiv Servis & Ticaret AS, the Turkish importer of Volkswagen AG vehicles, tumbled on reports the German carmaker is planning to retake distribution rights in the nation.

South Africa

South African (JALSH) stocks fell the most in a month after the nation’s largest provider of unsecured loans increased bad-debt write-offs, hurting other lenders and retailers. African Bank Investments dropped to the lowest price since 2005.

The Hang Seng China Enterprises Index (HSCEI) of mainland companies climbed 1.5 percent, while the Shanghai Composite Index rose for a fourth day. Both China Resources and Guangzhou R&F Properties capped the biggest gains in a month. China’s yuan rose to within 0.2 percent of a 19-year high on speculation capital inflows will spur appreciation.

Hyundai Motor jumped 2.9 percent in two days, while India’s benchmark stock gauge fell from its highest level in more than two years. The Jakarta Composite Index added 1.4 percent to a record as Telkom Indonesia gained 2.9 percent after Credit Suisse Group AG said it expects the company to post “double-digit” profit growth in 2013.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 267 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.

To contact the reporters on this story: Maria Levitov in London at mlevitov@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net

To contact the editors responsible for this story: Laura Zelenko at lzelenko@bloomberg.net; Gavin Serkin at gserkin@bloomberg.net


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