Emerging-market stocks rose as India’s benchmark gauge rallied the most in the world on speculation the main opposition party will win elections. The Ibovespa jumped as economists cut their Brazil inflation forecasts.
Samsung Electronics gained the most since August in Seoul as its chairperson was reported to be stable after a heart attack. The Bank of New York Mellon India ADR Index surged to a three-year high as exit polls released after the close in Mumbai showed the alliance led by Narendra Modi poised to win the most seats in a national election. Chinese technology shares rose on bets the government will take steps to bolster equities.
The MSCI Emerging Markets Index climbed 0.9% to 1 015.82, the highest closing level since April 10. The S&P BSE Sensex index has risen 13% since September 13, when the Bharatiya Janata Party named Modi its prime minister candidate. China will relax foreign-investment limits in listed companies, increase quotas for capital flow, and develop commodities trading tools, the cabinet said on May 9.
“There are strong hopes that if Modi becomes the next prime minister, he will initiate new reforms to accelerate growth,” said Hertta Alava, head of emerging markets at FIM Asset Management in Finland, which oversees the equivalent of about $415-million in developing-nation assets. “Gains in Chinese stocks are being driven by new comments about the further opening up of capital markets.”
Stock valuations The developing-nation measure has increased 1.3% this year and trades at 10.6 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 2% in the period, and is valued at a multiple of 14.2.
All 10 industry groups in the emerging-markets gauge gained on Monday. Samsung jumped 4%. Chairman Lee Kun Hee had surgery early yesterday after being resuscitated the previous night, Rhee So Eui, a spokesperson for Samsung Group, said in a statement. Tencent Holdings, Asia’s largest Internet company, soared 5.3% in Hong Kong, trimming its slump since reaching a record on March 6 to 21%.
The Sensex rallied 2.4% to a record. The BJP and its allies are estimated to have won 289 seats, compared with 101 for the Congress group, Bloomberg TV India reported, citing a Cvoter exit poll. The BJP bloc probably won 261 to 283 seats, according to an India Today exit poll, while the Congress-led alliance won 110 to 120 seats. No margin of error was given for either survey. Votes will be counted on May 16.
‘New normal’ “Traders are positioning for the results day,” Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance, said by phone from Mumbai. “There’s an expectation that a change in government will lead to improvement in India’s macroeconomic fundamentals.”
The Ibovespa rallied 1.8%, the best performance among major equity benchmarks in the Americas. Consumer prices in Brazil will rise 6.39% this year, down from an estimate of 6.50% a week earlier, according to the median forecast of economists surveyed by the central bank.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 1.5% and the Shanghai Composite Index rallied 2.1%, the most since March 21.
Policy makers are seeking to support the stock, bond and commodities markets as growth decelerates. President Xi Jinping said the economy needs to adapt to a “new normal” on growth, according to a state news report.
Russia’s Micex index rose 0.3% after falling as much as 0.6%. Vietnam’s VN Index tumbled 4.7% amid escalating tensions with China over disputed waters.
The premium investors demand to own emerging-market debt over US Treasuries slipped two basis points to 276 basis points, according to JPMorgan Chase indexes. – Bloomberg