Emerging-Market Stocks Advance on World Bank as Exporters Rally

Jan 15, 2014 5:29 pm ET

Jan. 15 (Bloomberg) -- Emerging-market stocks rose, led by exporters, after the World Bank raised its global growth forecasts. India’s shares climbed to a five-week high as the country’s inflation slowed more than economists estimated.

The MSCI Emerging Markets Index added 0.3 percent to 977.87. India’s S&P BSE Sensex climbed 1.2 percent, led by banks and automobile companies, while OAO Sberbank drove gains in Moscow after posting a profit increase. Brazil’s Ibovespa jumped to a one-week high as pulp producer Fibria Celulose SA led gains among exporters. Poland’s zloty paced losses among the 24 developing-nation currencies tracked by Bloomberg.

The World Bank sees the world economy expanding 3.2 percent this year, compared with a June projection of 3 percent and up from 2.4 percent in 2013. Part of the increase reflects improvement in the 18-country euro area, with the U.S. ahead of developed peers. The Federal Reserve said in its Beige Book business survey that “moderate” growth across most of the country last month was buoyed by gains in holiday spending, an improving labor market and strength in manufacturing.

“Global growth rates continue to improve, and that injects renewed optimism,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $150 billion of assets, said by phone. “The confirmation by the World Bank bodes well for risk markets.

The iShares MSCI Emerging Markets Index exchange-traded fund was little changed at $40.21. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, retreated 6.6 percent to 20.79.

Swap Rates

The Ibovespa gained as Fibria, which gets about 90 percent of its revenue outside Brazil, advanced 2.2 percent. Brazil’s central bank surprised analysts by maintaining the pace of the world’s biggest interest rate increases after inflation last month surged the most in more than a decade. The announcement came after the close of markets.

Russian stocks rallied the most in almost a month as OAO Uralkali, the world’s biggest potash producer, surged on bets prices will rise and OAO Sberbank, the nation’s largest lender, gained 1.5 percent. Poland’s shares gained and the zloty fell as data showed inflation undershot the official target for a 13th month, reinforcing the central bank’s vow to keep interest rates at a record low through at least June.

India’s S&P BSE Sensex increased to the highest level since Dec. 9. ICICI Bank Ltd. rose 2.1 percent, sending a gauge of lenders to a two-week high. Hero MotoCorp Ltd. added 1.8 percent, driving a measure of 10 automakers to its biggest gain in a month. the nation’s 10-year bonds gained, pushing the yield to the lowest level since October.

Great Wall

China’s stocks fell, as financial companies slumped after credit growth slowed and concern grew that rising share supply from initial public offerings will sap demand for existing equities. Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, and Huaxia Bank Co. slid at least 1.7 percent. Great Wall Motor Co., the largest maker of sport- utility vehicles, dropped 3.6 percent, extending losses after it delayed the introduction of a model.

The premium investors demand to own emerging-market debt over U.S. Treasuries declined five basis points, or 0.05 percentage point, to 311 basis points, according to JPMorgan Chase & Co.

--Editors: Rita Nazareth, Zahra Hankir