Bloomberg News

Emerging-Market Stocks Gain a Second Day on Europe Crisis Plan

October 24, 2011

Oct. 24 (Bloomberg) -- Emerging-market stocks gained for a second day, with the benchmark index poised for the highest close in more than a month, as European leaders outlined plans to help banks and a report showed China’s manufacturing may expand in October.

The MSCI Emerging Markets Index added 3.1 percent to 948.47 as of 10.35 a.m. in New York, set for the highest close since Sept. 20. The Hang Seng China Enterprises Index of Chinese shares traded in Hong Kong jumped 5.4 percent. Hungary’s BUX Index rose 2.4 percent to its highest in a week, while Russia’s Micex Index and Poland’s gauge advanced at least 2 percent. The Bovespa rose 1.7 percent in Sao Paulo to its highest in more than a month, while Mexico’s benchmark added 1.1 percent.

Work on assisting lenders is “going well,” French President Nicolas Sarkozy said in Brussels yesterday. Officials ruled out tapping the European Central Bank’s balance sheet to boost the region’s rescue fund in a crisis-management summit. The complete blueprint will be formed Oct. 26. A preliminary index of purchasing managers today showed China’s manufacturing may grow in October for the first time in four months.

“The market is piecing together some of the commentaries and press reports around the summit and has, so far, come to the conclusion that a solution is taking place,” Guillaume Salomon and Nalini Cundapen, London-based analysts at Societe Generale SA, wrote in e-mailed comments.

MSCI’s emerging-market index has slumped 18 percent this year, more than the 6.5 percent decline in the MSCI World Index of developed nations. The emerging-market gauge is valued at 10 times estimated profit, compared with 13.4 times at the end of 2010, according to data compiled by Bloomberg.

Moderate Slowdown

Poland’s WIG20 rose 2.5 percent. Russia’s benchmark Micex index also increased 2.5 percent as oil in New York rallied for the second day on speculation Europe will solve its debt crisis.

The slowdown in emerging markets has been moderate so far, Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC, said in a speech in Jakarta today, adding that such economies are strong and resilient. The decline in India’s economy reflects “highly unsettled conditions” globally and the nation’s prospects are “very good,” Singh said.

China’s preliminary manufacturing index, known as the Flash PMI, was at 51.1, the highest in five months, HSBC Holdings Plc and Markit Economics said today. A reading above 50 indicates expansion.

Eletrobras, Minera Frisco

Industrial & Commercial Bank of China Ltd. led gains among Chinese lenders after Barclays Plc. said it expected the nation’s banks to report “strong” profit growth in the third quarter. ICBC, the world’s largest bank by market value, added 5.8 percent in Hong Kong, while China Construction Bank Corp. gained 4.1 percent.

Minera Frisco SAB, the mining company controlled by Mexican billionaire Carlos Slim, was among the biggest gainers in Mexico City, climbing 5 percent. Mexichem SAB, the largest maker of plastic pipes in Latin America, rose 2.1 percent.

Centrais Eletricas Brasileiras SA, Latin America’s largest publicly traded power company, gained 2.4 percent in Sao Paulo after it bid for the 21 percent stake in EDP Energias de Portugal being sold by the Portuguese government. Vale, the world’s largest iron-ore producer, followed metal prices higher and gained 3.5 percent.

Turkey Quake

Turkey’s benchmark stock index, the ISE National 100 Index, fell 0.9 percent in Istanbul, led by a retreat by banks after the central bank moved to reduce the amount of liquidity it provides to the market, increasing demand for a special funding facility.

Mardin Cimento Sanayii & Ticaret AS, a cement maker, climbed as much as 11 percent on speculation demand for the building material will rise after an earthquake struck southeast Turkey yesterday.

The earthquake flattened apartment buildings in the Van region near the Iranian border and may have damaged as many as 4,000 homes, government officials said. The death toll climbed to 264 people, 117 of them in the northern town of Ercis, and at least 970 buildings including a dormitory collapsed.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell seven basis points, or 0.07 percentage point, to 402, according to JPMorgan Chase & Co.’s EMBI Global Index.

The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps increased 12 basis points to 311, according to data provider CMA.

--Editors: Brendan Walsh, Marie-France Han

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