Business | Markets
Emerging markets cap their best week in 21 years
Emerging-market stocks rose, capping their best week in 21 years, as investors speculated pledges from central banks and the International Monetary Fund (IMF) will help developing nations weather the economic slowdown.
- Bloomberg
- Published: 22:58 November 1, 2008
London: Emerging-market stocks rose, capping their best week in 21 years, as investors speculated pledges from central banks and the International Monetary Fund (IMF) will help developing nations weather the economic slowdown.
Gazprom, Russia's big-gest publicly traded company, gained 67 per cent after the government started buying shares in companies.
Posco, Asia's biggest steelmaker, rose 50 per cent in the past five days as the Federal Reserve provided South Korea with a Dh110.19 billion ($30 billion) credit line.
Gafisa led advances for Brazilian homebuilders, rising 35 per cent after the government said it would provide low-cost loans to the industry.
Even with the weekly gains, the MSCI Emerging Markets Index fell 28 per cent in October, the biggest monthly slump since the index was created in December 1987.
Investors sold emerging-market stocks, currencies and bonds this month as the credit crisis pushed the world toward a recession and threatened to cut growth rates.
The index pared losses as the US Federal Reserve and IMF provided currency swap agreements and emergency loans to developing nations.
"We suspect the market believes the broadening liquidity support is helpful," Nick Chamie, head of emerging-market research at RBC Capital Markets in Toronto, wrote. "But there is a lingering sense of caution on a longer-term view given elevated risks of 'skeleton in the closet' appearing in unforeseen ways."
The IMF increased borrowing limits twofold for emerging-market countries this week and provided Hungary and Ukraine with a total of more than $30 billion in emergency loans.
The Fed agreed to provide $30 billion each to central banks in Brazil, Mexico, South Korea and Singapore. The MSCI Emerging Markets Index may double from a four-year low this week, Michael Hartnett, Merrill's global emerging-market equity strategist, said.
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