Emerging Stocks Climb to 13-Month High on Global Growth Outlook

Jul 02, 2014 5:12 pm ET

July 2 (Bloomberg) -- Emerging-market shares rose, sending the benchmark index to the highest level in 13 months, as growing confidence in global economic growth lifted technology companies. Dubai’s stock market rallied the most in the world.

Taiwan Semiconductor Manufacturing Co. added 3.5 percent, pushing a gauge of technology stocks to a record. The S&P BSE Sensex Index in Mumbai closed at the highest level since 1979 amid bets the budget will contain measures to strengthen the economy. The Ibovespa fell in Brazil while markets in Mexico and Chile gained. Dubai’s DFM General Index recovered almost half of its June losses and Russian equities climbed for a second day. The rand slid 0.9 percent amid strikes in South Africa.

The MSCI Emerging Markets Index increased 0.9 percent to 1,060.57 in New York, its highest close since May 2013. Data yesterday that showed manufacturing expansion from China to the U.K. and the U.S. has boosted the outlook for developing-nation exporters. The U.S. will issue its monthly non-farm payrolls report tomorrow.

“The global backdrop is quite supportive at the moment,” Lars Christensen, an emerging-market strategist at Danske Bank A/S, said by phone from Copenhagen. “The U.S. macro numbers continue to be quite solid. Three to four percent growth this year is now within reach,” which bodes well for developing nations, he said.

The emerging-market index has climbed 5.8 percent this year and trades at 11.1 times projected earnings for the next 12 months, according to data compiled by Bloomberg. That compares with a similar 5.8 percent gain in the MSCI World Index, which is valued at a multiple of 15.2.

Dubai Rebounds

Dubai’s stock index jumped 7.9 percent, bringing to 11 percent its two-day surge. It tumbled 23 percent in June, the steepest monthly plunge since November 2008.

The Ibovespa fell 0.3 percent in Sao Paulo, the first decline in three days. A 1.6 percent drop in Itau Unibanco Holding SA, Latin America’s biggest lender by market value, overshadowed a rally in raw-material producers including Vale SA, which gained 2 percent.

The Micex Index increased 2.1 percent in Moscow, the most since June 24, amid four-party talks aimed at resolving the Ukraine conflict. South Africa’s benchmark equities gauge rose 0.8 percent to a record.

The zloty appreciated 0.4 percent against the euro, advancing for the first time in five days, as the central bank kept its key interest rate unchanged at record low 2.5 percent for the 12th month. The WIG20 Index slid 1 percent in Warsaw, the second-worst performance among more than 90 indexes monitored by Bloomberg.

Coal Producer

The PX Index in Prague lost 0.3 percent. New World Resources Plc tumbled 26 percent to a record low after the unprofitable Czech coking-coal producer said it hired a prospective insolvency administrator and seeks to sell its main assets.

Taiwan Semiconductor, the world’s largest contract manufacturer of chips, rose to a record in Taipei, while Samsung Electronics Co., Asia’s biggest technology company, increased 1.5 percent in Seoul. MSCI Inc.’s gauge of emerging-market technology shares gained 1.9 percent, the most among 10 industry groups.

India’s rupee strengthened 0.6 percent, the biggest gain since May 16, and the Sensex added 1.3 percent. The Hang Seng China Enterprises Index, comprised of mainland companies listed in Hong Kong, rose 1.1 percent while South Korea’s Kospi index advanced 0.8 percent.

The Indonesian rupiah fell 0.4 percent amid concern presidential frontrunner Joko Widodo is losing his lead in opinion polls.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell six basis points to 259, according to JPMorgan Chase & Co. indexes.

--With assistance from Krystof Chamonikolas in Prague, Taylan Bilgic and Constantine Courcoulas in Istanbul, Marton Eder in Budapest and Maciej Onoszko and Piotr Bujnicki in Warsaw.