Bloomberg News

Emerging-Market Stocks Rise for Fourth Day on Europe’s Aid Plan

July 22, 2011

July 22 (Bloomberg) -- Emerging-market stocks advanced for a fourth day, driving the benchmark index to the biggest weekly gain in three, amid optimism European officials will contain the region’s debt crisis.

The MSCI Emerging Markets Index added 0.9 percent to 1,153.42 at 2:07 p.m. in Singapore, taking its increase for the week to 1.6 percent. Today’s rally erased the gauge’s losses for the year. Thailand’s SET Index climbed to the highest since August 1996. The Hang Seng China Enterprises Index jumped 2 percent, while South Korea’s Kospi Index rose 1.2 percent.

Euro-area leaders announced 159 billion euro ($229 billion) in new aid for Greece late yesterday and eased the terms of loans for cash-strapped nations. PetroChina Co. rose the most in two weeks and S-Oil Corp. surged 7 percent as the improving outlook for Europe’s economy helped drive oil prices higher for a fourth day. Shares of exporters climbed, paced by Samsung Electronics Co.

“Today’s a relief rally,” Pu Yonghao, the Hong Kong-based chief investment strategist for Asia Pacific at UBS AG’s wealth management unit, said in a Bloomberg Television interview today. “The European debt crisis seems to have made a little bit of progress, which is positive.”

Emerging-market equities have trailed their developed- nation counterparts this year, with the MSCI World Index climbing 5.2 percent in 2011. Companies on the emerging-market index are trading at 11 times estimated earnings, less than the four-year average multiple of 12.6 times.

Fund Flows

Developing-nation equity funds reported withdrawals of $1.1 billion in the week ended July 20, snapping three straight weeks of net inflows, Citigroup Inc. said in a report today. Citigroup expects emerging equities to “pick up steam” in the second half of 2011 and eventually outperform developed market equities for the full year, analysts led by Geoffrey Dennis wrote in a separate report.

In Europe, officials empowered their 440-billion euro rescue fund to buy debt across stressed nations, helping to erect a firewall around Spain and Italy even as they risked temporary default to lighten the Greek debt burden.

PetroChina climbed 1.9 percent in Hong Kong. Oil for September delivery gained 0.5 percent in New York, extending a three-day, 3 percent increase.

Samsung Electronics, which gets about a fifth of its revenue from Europe, rose 1 percent in Seoul. Shares of the world’s biggest maker of computer memory chips also rallied after Microsoft Corp. and Advanced Micro Devices Inc. posted profits that beat estimates. Nanya Technology Corp. and Inotera Memories Inc. surged more than 4.5 percent in Taipei.

Thai Shares Rally

Thailand’s stock benchmark index, the world’s second-best performer in the past month, reached a 15-year high as a peaceful transition of power following the July 3 election drew overseas investors. Kasikornbank Pcl, the third-largest lender by assets, jumped 3.3 percent to a record on expectation that economic expansion and new government policies will fuel earnings growth.

China Shenhua Energy Co. advanced 2.5 percent in Hong Kong, set for the highest close since January 2010, after sales climbed last month. Other coal producers also rallied, with Yanzhou Coal Mining Co. adding 1.5 percent.

Tenaga Nasional Bhd., Malaysia’s biggest power producer, slid 4.8 percent, headed for the lowest close since May 25. Tenaga had a net loss of 440.2 million ringgit ($148 million) in the third quarter ended May 31, compared with a profit of 1.11 billion ringgit a year earlier, because of higher generation costs, according to a company statement.

--Editors: Shiyin Chen, Matthew Oakley

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

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


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