Bloomberg News

Emerging Stocks Rise to 3-Week High on Greece, Growth Optimism

June 30, 2011

June 30 (Bloomberg) -- Emerging-market stocks rose for a third day, sending the benchmark index to a three-week high, as concern of a Greek default eased and investors speculated the global economic expansion is intact.

The MSCI Emerging Markets Index climbed 1 percent to 1,143.68 at 12:01 p.m. in London, paring its second-quarter decline to 2.3 percent. China’s CSI 300 Index advanced 1.5 percent as BYD Co., the automaker part-owned by Warren Buffett’s Berkshire Hathaway Inc., jumped 41 percent on its trading debut in Shenzhen. The South Korean won strengthened 0.9 percent against the dollar to lead gains in emerging-market currencies.

The MSCI gauge pared its June decline to 2.1 percent after Greek Prime Minister George Papandreou won enough votes yesterday to pass the first part of an austerity plan aimed at meeting European Union aid requirements. South Korea’s industrial production rebounded from a seven-month low in May, topping economists’ estimates as chip, machinery and car makers boosted output on global demand.

“Risk-taking is starting again, people are focusing on bargain-hunting as stocks have pulled back pretty dramatically in the last month,” said Geoffrey Ng, who manages $1 billion as chief executive officer at HLG Asset Management Sdn. in Kuala Lumpur. “Emerging markets and Asia really stand out in terms of growth prospects.”

Korean Output

All of the MSCI index’s 10 industry groups gained, led by consumer, financial and industrial companies. LG Electronics Inc., the world’s third-biggest mobile-phone maker which gets about 16 percent of sales from Europe, added 0.7 percent in Seoul trading. Acer Inc., which generated about 39 percent of its sales from Europe last year, jumped 1.8 percent in Taipei.

The MSCI Emerging Markets Index has dropped 0.7 percent this year, compared with a 3.1 percent gain in the MSCI World Index of developed-country stocks.

The Czech PX Index rose 0.4 percent. Hungary’s BUX index fell 0.2 percent and Poland’s WIG20 Index slid 0.3 percent.

Greece’s Papandreou yesterday secured a vote in favor of an austerity plan that clears the way for the next payment due from last year’s bailout. He faces a final vote today to stave off default.

South Korean industrial output climbed 8.3 percent in May from a year earlier after gaining a revised 6.9 percent in April, Statistics Korea said today. The median estimate of 12 economists in a Bloomberg News survey was for a 6.9 percent increase.

BYD Surges

Korea Aerospace Industries Ltd., the nation’s largest planemaker, surged 43 percent on its trading debut after raising about $530 million in the nation’s largest initial public offering this year.

The Shanghai Composite Index pared its quarterly loss to 5.7 percent. BYD raised 1.35 billion yuan ($208 million) in a share sale in Shenzhen, China, to fund research and expand its manufacturing facilities.

Turkey’s lira weakened 0.2 percent after the country’s trade deficit more than doubled in May from a year earlier, exceeding economists’ forecasts. The deficit was $10.1 billion, the biggest on record, compared with $4.9 billion a year earlier, the statistics office in Ankara said today.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped one basis points, or 0.01 percentage point, to 298, according to according to JPMorgan Chase & Co.’s EMBI Global Index. The Markit iTraxx SOVX CEEMEA Index of credit-default swaps for emerging Europe, the Middle East and Africa fell two basis points to 198, according to data provider CMA in London.

--With assistance from Zhang Shidong in Shanghai, and Rajhkumar K Shaaw and Santanu Chakraborty in Mumbai. Editors: Linda Shen, John Kohut

To contact the reporters on this story: Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net; Michael Patterson at mpatterson10@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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