STOCKS in developing countries advanced for a sixth day, erasing the MSCI Emerging Markets Index's 2008 loss, as record-breaking rallies in oil, coal and soybeans boosted equities from Rio de Janeiro to Moscow.
Gerdau SA, PT Bumi Resources and OAO Lukoil led the rebound as rising global demand and the falling dollar pushed oil above US$127 a barrel.
Stocks in Brazil and Russia propelled the index, which lost as much as 16 percent this year, to within 7.4 percentage points of a record, Bloomberg News reported.
"As long as we're seeing strong commodity prices, the implication is that the emerging markets are still growing," said Walter "Bucky" Hellwig, who helps oversee US$30 billion at Morgan Asset Management, Alabama. "The supply constraints in commodities are here for at least several more years, so these stocks should continue to do well."
The worst start for global equities since 2001 has given way to the steepest recovery in four years as the Federal Reserve's bailout of US banks and the surge in commodity companies restored investor confidence in stocks.
MSCI's Emerging Markets Index rebounded almost 20 percent from its 2008 low. The Standard & Poor's 500 Index, which fell as much as 13 percent, is within 3 percent of its level on December 31, as is the UK's FTSE 100 Index. The MSCI World Index, which tumbled 9.5 percent last quarter, rallied 13 percent since March 17. The biggest two-month gain since June 2003 left the measure 1.9 percent lower than at the end of 2007.
The MSCI Emerging Markets Index added as much as 0.5 percent to 1,245.98 yesterday.
The index, which ended 2007 at 1,245.59, has quadrupled in the past five years. On average, companies in the measure trade for 15.9 times earnings, 21 percent higher than the monthly average since the start of 2002.
The gauge of stocks in countries from Mexico to Israel and Korea dropped as much as 22 percent from its October 29 peak as increasing bank losses and tightening credit standards threatened to slow economic expansion worldwide. Energy and raw-material producers gained 33 percent and 36 percent since the January 22 low.