Emerging-Market Stocks Halt 10-Day Drop; Lukoil, Petrobras Gain
May 23 (Bloomberg) -- Emerging-market stocks rose, snapping the longest losing streak in almost eight years, after a rebound in oil prices lured investors back to shares of energy producers. Russia's OAO Lukoil and Petroleo Brasileiro SA of Brazil gained.
``The market has found some confidence,'' said Cyrus Golpayegani, who helps manage the equivalent of $3.9 billion in emerging-market equities at Raiffeisen Capital Management in Vienna. ``Commodity prices are still stable, especially with oil prices hovering around $69 to $70 a barrel.''
The Morgan Stanley Capital International Emerging Markets Index, which tracks shares in 26 developing countries globally, climbed 2.1 percent to 765.98 as of 12:51 p.m. in New York. The gauge is headed for the biggest one-day gain since June 2004.
The measure tumbled 15 percent in the last 10 days on concern that rising interest rates will slow economic growth worldwide and reduce demand for the riskiest assets. The stretch of losses was the longest since August 1998, just before Russia devalued the ruble.
Energy-related shares accounted for about a third of today's increase. Shares in Russia, the world's second-biggest oil producer, advanced the most among emerging markets in the MSCI. The Russian Trading System Index rose 6.8 percent, rebounding after nine consecutive declines.
Gains in Europe, the Middle East and Africa contributed most to the MSCI Emerging Markets index. South Africa's FTSE/JSE Africa All Share Index added 3.8 percent as mining stocks rose.
In Latin America, Brazil's Bovespa advanced 2 percent, led by a 3.1 percent rise in iron ore miner Cia. Vale do Rio Doce and Petrobras's gain. Mexico's Bolsa index rose 0.7 percent.
Energy Rebound
The dollar-based MSCI measure for developing countries in Asia climbed 0.5 percent, partly reflecting gains in the South Korean won, the Indonesian rupiah and the Taiwan dollar versus the U.S. currency.
South Korea's Kospi index lost 0.7 percent and Taiwan's Taiex slipped 1.4 percent as some emerging markets failed to recover. In Egypt, the CASE 30 Index tumbled 7.5 percent, the biggest move among countries tracked by MSCI.
Oil producers led the rally in global emerging markets, with the industry measure jumping 5.4 percent.
Lukoil, Russia's biggest oil producer, soared 9.3 percent to $76.37. OAO Surgutneftegaz, the nation's fourth-largest energy company, surged 16 percent to $1.35.
Petrobras, Brazil's state-controlled oil company, climbed 2.6 percent to 44.09 reais. Cnooc Ltd., China's biggest offshore oil company, added 0.9 percent to HK$5.90.
Oil gained on speculation that last week's drop in energy and metals prices was larger than justified given global economic growth. Crude oil for July delivery rose as much 1.9 percent to $71.30 a barrel on the New York Mercantile Exchange. The futures reached a record $75.35 last month.
Copper, Gold
Anglo American Plc, the world's second-biggest mining company, advanced 7.9 percent to 255.51 rand. BHP Billiton, the world's No. 1, climbed 5.4 percent to 127.98 rand.
Copper climbed more than 10 percent, its largest-ever gain, on speculation that a price rally isn't yet over and that demand will exceed production. Gold also gained.
Copper has jumped 83 percent this year, while gold has increased 29 percent in the period.
The MSCI Emerging Markets has advanced 8.4 percent in 2006, reaching a record on May 8, as commodity prices surged. The index has more than tripled since a low of 245.64 on Sept. 21, 2001.
``We have seen things getting a bit frothy,'' said Devan Kaloo, who oversees $12 billion as head of global emerging markets at Aberdeen Asset Management Plc in London. ``We will see slower economic growth, which will mean slower corporate profit growth.''
Egyptian stocks led declining shares in developing nations today, with the CASE 30 Index sliding 7.5 percent. That was the biggest move among equity markets included in global benchmarks.
`Panic Selling'
``There is panic selling among investors,'' said Walaa Hazem, an analyst at HC Securities & Investment, a Cairo-based firm that manages the equivalent of more than $350 million.
Yesterday, exchanges in Russia and India halted trading for an hour as prices plunged, while the Micex Stock Exchange in Moscow closed 15 minutes early. India's Sensitive Index fell more than 10 percent yesterday before rebounding after the government said banks will help investors meet calls for cash.
The Sensex today rose 3.3 percent, halting a 14 percent slide in the past three days. Finance Minister Palaniappan Chidambaram said that investors, with the help of lenders, have met their payment obligations and that the stock market has ``high liquidity.''
Some investors said the declines in emerging markets may be short-lived because of sustained earnings growth.
``I am still optimistic about emerging markets' long-term outlook, but investors tend to ignore the fact that this is a long- term view, not for the next few months,'' said Rebecca Lin, who manages $206 million of Asian equities at PCA Securities Investment Trust Co. in Taipei. ``Emerging markets have experienced some growing pains lately.''
To contact the reporter for this story:
Michael Tsang in Tokyo at mtsang1@bloomberg.net;
Maria Ermakova in Moscow at mermakova@bloomberg.net. |
