Bloomberg News

Emerging Stocks Fall on Moody’s Ratings Review, Growth Worries

December 12, 2011

Dec. 12 (Bloomberg) -- Emerging-market stocks fell for a third day after Moody’s Investors Service said it will review ratings for European countries and data from China to Brazil highlighted concerns about weakening growth.

The MSCI Emerging Markets Index slipped 1 percent to 924.91 at the close in New York, with 433 stocks retreating versus 298 advancing. The decline brought the three-day drop to 3.6 percent. The Bovespa Index declined 1.5 percent as concern mounted that Brazil’s economy may falter. The Sensex Index dropped 2.1 percent in Mumbai after Indian industrial production fell for the first time since June 2009. China’s Shanghai Composite Index fell to the lowest since March 2009 as data showed exports rose by the least in two years.

Last week’s European Union summit offered few new measures and doesn’t diminish the risk of credit-ranking revisions, Moody’s said today. Chinese customs data showed overseas shipments rose 13.8 percent in November from a year earlier. Excluding distortions in January and February each year, that was the least since export growth resumed in December 2009.

“Sensitivity around emerging markets’ growth patterns has picked up,” Nick Chamie, global head of emerging markets at RBC Capital Markets in Toronto, said by phone. “The deterioration in emerging markets growth indicators will deepen over the next two to three months and that will keep the emerging market growth slowdown in focus.”

Brazil Growth, India Production

Economists cut their forecast for Brazil’s 2012 gross domestic product expansion for a third straight week, to 3.4 percent from 3.48 percent previously, according to the weekly central bank survey published today. They also lowered their projection for interest rates next year to 9.5 percent from 9.75 percent.

State-controlled oil producer Petroleo Brasileiro SA and miner Vale SA, the index’s heaviest-weighted companies, followed crude and metals prices lower. Cyrela Brazil Realty SA Empreendimentos e Participacoes, Brazil’s second-biggest homebuilder by revenue, paced declines for companies that depend on domestic demand, falling 2 percent.

Reliance Industries Ltd., India’s biggest company by market value, slid 3.7 percent in Mumbai.

Production at Indian factories, utilities and mines fell 5.1 percent from a year earlier in October, the government reported today. The slide exceeded the median of 24 estimates in a Bloomberg survey for a 0.7 percent drop. Output was down 3.3 percent from September, the third decline in four months.

Ultrabooks Boost Samsung

All 30 stocks on the Micex declined as the Russian index plunged to a two-month low. OAO Sberbank, Russia’s biggest lender, dropped 3.1 percent in Moscow. OAO Lukoil fell 1.5 percent.

The ISE National 100 Index fell 2.6 percent in Istanbul.

South Korea’s Kospi Index gained 1.3 percent. Samsung SDI Co. rose 6.8 percent on speculation earnings will improve in 2012, helped by an expected increase in demand for lightweight Ultrabook laptops, said Kim Byung Ki, an analyst with Kiwoom Securities.

Twenty-three of 25 emerging-market currencies tracked by Bloomberg depreciated against the dollar. The Hungarian forint lost 2.9 percent and the Brazilian real slid 2.5 percent.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage point, to 409, according to JPMorgan Chase & Co.’s EMBI Global Index.

--With assistance from Weiyi Lim in Singapore and Stephen Gunnion in Johannesburg. Editors: Brendan Walsh, Stephen Kirkland

To contact the reporters on this story: Jason Webb in London at jwebb25@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

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


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