Ian Sayson & Maria Levitov

Emerging-market stocks rose, lifting the main index to an eight-month high, as the World Bank raised its East Asia growth outlook, business confidence in Germany improved and investors anticipated a U.S. budget deal.

New World Resources NV (NWR), the Czech Republic’s largest coal producer, headed for its highest close in almost four months, helping the country’s benchmark PX Index post its longest rally since 2009. OAO Severstal, the steelmaker controlled by billionaire Alexey Mordashov, was set for its longest winning streak since Sept. 12 in Moscow. The zloty reached its strongest level in 10 weeks as a second monthly improvement in German business confidence spurred expectations that Poland’s biggest export market can withstand the euro area’s recession.

The MSCI Emerging Markets Index (MXEF) added 0.6 percent to 1,052.30 as of 12:49 p.m. in London, heading for the highest close since April 3. Developing nations in East Asia will probably grow 7.5 percent this year, compared with a previous 7.2 percent forecast, contributing about 40 percent of global growth, the World Bank said in a report today. House Speaker John Boehner offered a backup plan that would raise tax rates for Americans making more than $1 million a year, as he seeks compromise between fellow Republicans and the government.

“It’s the rally that we usually get at the start of the new year coming early,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London, said by email. “There is optimism that we’re close to an agreement in the fiscal cliff negotiations.”

Russia, Brazil

The 21 countries in the emerging-markets index send about 17 percent of their exports to the U.S., according to data compiled by the World Trade Organization.

Brazil’s Bovespa rose 0.2 percent, gaining for a second day and poised for the highest close since Sept. 24. Russia’s Micex Index (INDEXCF) slipped less than 0.1 percent, while the ruble added 0.6 percent versus the dollar, the most since Nov. 29 on a closing basis, rising for a second day as crude oil, the country’s main revenue-earner, traded at $88.40 per barrel, a two-week high.

The FTSE/JSE Africa All Share Index climbed to a record for a second day, while the South African rand pared gains, weakening for the first time in four days. The Istanbul Stock Exchange National 100 Index (XU100) rose 0.3 percent, poised for the highest close since 1988.

The forint strengthened for a second day as global investor confidence offset a fifth month of rate cuts in Hungary. Hungary’s benchmark index slid 0.3 percent, reversing yesterday’s gains, while the stocks index in Poland rose.

Sentiment

In Germany, Europe’s largest economy, the Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 102.4 in December from 101.4 in November. That was the second straight increase in German business confidence after sentiment dropped to a 2 1/2 year low in October. Economists had predicted a gain to 102, according to the median forecast of 43 economists in a Bloomberg News survey.

The Czech Republic’s PX Index added 0.8 percent, rising for a seventh day, its longest winning streak since March 2009. New World Resources jumped 6.1 percent, its sixth day of gains, and was poised for the longest winning streak in two years.

CEZ AS (CEZ), the biggest Czech utility, rose 1 percent after Goldman Sachs Group Inc. recommended buying the stock and Chief Executive Officer Daniel Benes told Hospodarske Noviny the company’s total loss from investment in Albania may be lower than an estimate of 202 million euros ($268 million) from Moody’s Investors Service.
Coal Power

Severstal gained 2.2 percent, rising for a fourth day, the longest winning streak since Sept. 12 in Moscow. OAO Novorossiysk Commercial Sea Port delined 3.6 percent, the biggest drop on the Micex and the stock’s first loss in seven days. Novorossiysk reported “disappointing numbers” in November, Andrey Rozhkov, an analyst at IFC Metropol, said by phone from Moscow.

Aksa Enerji Uretim AS (AKSEN), a Turkish energy producer, rose 2 percent in Istanbul, heading for the highest close since July 2011, after the company announced today it got a $240 million loan to finance Goynuk coal power plant project.

Developing East Asia is set to expand 7.9 percent in 2013, according to the World Bank.

“Asia as a region is in expansionary mode without the problems plaguing the U.S. or Europe,” Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc., said by phone. “Low interest rates and infrastructure spending support the region’s expansionary growth outlook.”

Goldman said in a note to clients today that comments by India’s central bank yesterday signal a 50 basis point cut in the nation’s benchmark rate starting January.

Trains to Iraq

The BSE India Sensitive Index, or Sensex, added 0.6 percent to its highest level in almost two weeks. The Philippine Stock Exchange Index (PCOMP) rose 2.1 percent after the government forecast “robust” first-half economic growth. Thailand’s SET Index climbed 1.1 percent to the highest since February 1996. South Korea’s market is closed for elections.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong advanced 0.8 percent, the highest close since March. Dongfang Electric Corp. (600875) climbed 5.3 percent to a five-month high in Hong Kong after winning a $115 million contract to deliver 10 diesel multiple-unit passenger trains to Iraq, according to a spokesman for state-run Iraqi Railway Co. The Bloomberg JP Morgan Asia Dollar Index rose 0.1 percent to the highest since Sept. 9, 2011.

A gauge of financial stocks in the MSCI Emerging Markets Index added 0.4 percent to the highest since August 2011. The broader index has risen 14.8 percent this year, exceeding a 14.5 percent gain by the MSCI World Index of developed countries. The developing-nations measure trades at 12.1 times estimated earnings, compared with the MSCI World’s multiple of 13.9, data compiled by Bloomberg show.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries narrowed by three basis points, or 0.03 percentage point, to 261 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

http://www.bloomberg.com/news/2012-12-19/emerging-market-stocks-rise-to-8-month-high-on-growth-outlook.html