Bloomberg News

Emerging-Market Stocks Gain on Commodity Prices, IBM Earnings

July 19, 2011

July 19 (Bloomberg) -- Emerging-market stocks rose after commodity prices climbed and International Business Machines Corp. lifted its profit forecast, fueling speculation earnings will withstand the European and U.S. debt crises.

The MSCI Emerging Markets Index added 0.6 percent to 1,129 at 4:41 p.m. in New York, its strongest gain since July 13. Brazil’s Bovespa index advanced for the first time in four sessions after consumer and wholesale prices declined this month. India’s Bombay Stock Exchange Sensitive Index climbed 0.8 percent, while Russia’s Micex Index increased 0.7 percent. Mexico’s peso gained for a second day, rising 0.5 percent against the dollar, as housing starts in the U.S., the nation’s largest trading partner, jumped more than forecast in June.

IBM, the world’s biggest computer-services company, lifted its full-year earnings forecasts after posting second-quarter sales that beat analyst estimates. Catcher Technology Co. rallied in Taipei after three brokerages raised their share- price forecasts, while Realtek Semiconductor Corp. surged as Morgan Stanley upgraded the stock.

“The top-down story, macro issues, have been making headlines for the past few weeks, and now with emerging markets trading at attractive levels, valuations are mitigating some of the macro risks,” said Eric Conrads, who helps manage $12 billion in emerging market stocks at ING Investment Management in New York, in a phone interview. “People are looking at some of the oversold names and realizing there’s some value in emerging markets.”

Europe, U.S. Debt

The emerging-market index has retreated 6.4 percent since May 2, when it reached the highest in almost three years, dragged down by concern that Europe’s debt crisis will spread and monetary tightening from China to India will curtail growth. European Union leaders are trying to convince investors a second Greek bailout agreement will be reached in a July 21 meeting, while U.S. lawmakers are struggling to broker a deal on raising the nation’s debt ceiling before an Aug. 2 deadline.

Banks including Itau Unibanco Holding SA, Brazil’s biggest lender by market value, climbed 2.4 percent as traders pared bets for higher borrowing costs. Redecard SA, Brazil’s second- biggest card-payment processor, jumped 2.4 percent, as companies that benefit from increased domestic demand advanced. Brazil’s Bovespa index rose 0.4 percent.

Russia’s OAO Gazprom, the nation’s biggest natural gas producer, and OAO Rosneft, the largest oil company, helped lift the benchmark equity gauge for the first time in three days. South Africa’s FTSE/JSE Africa All Share Index jumped 0.6 percent as prices for metals advanced.

Pacific Rubiales

Pacific Rubiales Energy Corp., the Toronto-based oil producer that operates fields in Colombia, surged 5.9 percent as crude for August delivery advanced $1.57 to settle at $97.50 a barrel on the New York Mercantile Exchange. Rubiales rose after Ecopetrol SA, Colombia’s biggest oil producer, said its share offering will be smaller than some investors had expected

China’s Shanghai Composite Index declined 0.7 percent, the steepest loss in a week. Copper futures for September delivery advanced 7.35 cents, or 1.7 percent, to $4.4765 a pound.

Tata Consultancy Services Ltd., an Indian software company, added 1.3 percent in Mumbai and Samsung Electronics Co., Asia’s largest chipmaker, rose 1.1 percent.

IBM said second-quarter revenue rose 12 percent to $26.7 billion, topping a $25.4 billion average estimate of analysts surveyed by Bloomberg.

Catcher, which makes metal casings for Apple Inc. computers, jumped 6.9 percent after Citigroup Inc. and Macquarie Group Ltd. both raised their share-price estimates by 22 percent. Realtek Semiconductor increased 6.9 percent, the sharpest gain since Sept. 3, after the chip designer was raised to “equal-weight” from “underweight” at Morgan Stanley.

China Merchants Bank Co., the nation’s sixth-biggest lender, lost 1.4 percent to the lowest close since June 20 amid plans to raise as much as 35 billion yuan ($5.4 billion) in a rights offer. The bank will offer 2.2 shares for every 10 existing shares held by investors at a price that will be set later, it said in a statement yesterday.

--Editors: Stephen Kirkland, Linda Shen

To contact the reporters on this story: Ian Sayson in Manila at isayson@bloomberg.net; Namitha Jagadeesh in London at njagadeesh@bloomberg.net; Leon Lazaroff in New York at llazaroff@bloomberg.net

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


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