Emerging-market stocks rose, capping a record five-week rally, as higher commodity prices boosted Russian energy companies and agreements on new prime ministers in eastern Europe eased concerns over political instability.
The MSCI Emerging Markets Index added 1.6 per cent to 626.87, bringing its 25-day gain to 32 per cent, the most since the gauge started in 1987. The Micex Index in Russia, the world’s biggest energy-exporting economy, jumped as much as 4.8 per cent to a six-month high as oil gained and Prime Minister Vladimir Putin said the government plans $90 billion in economic aid. Bulgaria’s Sofix index added 5.8 per cent, leading gains worldwide.
“We’re adding more risk and turning less defensive,” said Roberto Lampl, a fund manager who helps oversee about $12 billion in emerging-market assets at ING Investment Management in The Hague. “From monetary easing to joint fiscal policy to capital becoming less constrained at banks, the potential for a recovery in 2010 and 2011 seems more likely.”
Developing-nation stocks have rebounded 11 per cent this year, paring the 54 per cent decline in 2008 as the global economic slowdown cut off credit, triggered more than $70 billion in International Monetary Fund bailouts and contributed to the collapses of governments in Latvia, Hungary and the Czech Republic.
Hungary’s Budapest Stock Exchange Index rose as much as 3.4 per cent to the highest since January 14 after Economy Minister Gordon Bajnai secured the endorsement of the country’s ruling Socialist party to take over as premier, pledging “immediate and painful” spending cuts to fight the effects of the global economic crisis. OTP Bank Nyrt., Hungary’s largest lender, added 4.5 per cent.
Czech parliamentary leaders yesterday agreed on a proposal for the country’s head statistician Jan Fischer to lead a caretaker government. The Prague Stock Exchange Index increased as much as 1 per cent, before dropping 1 per cent at 2:19 pm in Prague. Komercni Banka AS fell 3.8 per cent as the unit of Societe Generale SA was downgraded to “hold” from “buy” by KBC Groep NV.
Currencies rallied, led by the Ukrainian hryvnia’s 2.14 per cent appreciation against the dollar. Serbia’s dinar gained 1.6 per cent to 69.0055 a dollar after the central bank lowered interest rates 1.5 percentage points to 15 per cent.
Stocks and bonds worldwide have soared since the US Federal Reserve pledged last month to buy Treasuries and mortgage-backed bonds, Treasury Secretary Timothy Geithner unveiled plans to finance purchases of as much as $1 trillion in banks’ distressed assets, and the Group of 20 leaders pledged to triple the lending resources of the IMF to $750 billion.
Policy efforts are helping to thaw global credit markets, Fed Chairman Ben S Bernanke said April 3. Crude oil climbed 2.1 per cent to $53.60 a barrel in New York on speculation that economic stimulus plans and cuts in output from the Opec may slow growth in stockpiles. Copper headed for its longest winning streak in more than a year and nickel, lead, zinc and aluminum prices also rose, helping boost revenue for emerging economies sustained by exports.
OAO Transneft, Russia’s state-owned oil pipeline operator, advanced 14 per cent, the most in almost two months, after Putin told the lower house of parliament oil pipes from eastern Siberia to the Chinese border will be ready in “several weeks.”
The Micex was 0.7 per cent higher at 843.77 at 4:23 pm in Moscow.
