Bloomberg News

Most Emerging Stocks Rise; Index Set for Worst Year Since 2008

January 03, 2012

Dec. 30 (Bloomberg) -- Most emerging-market stocks rose, paring the benchmark index’s first annual decline since 2008, as better-than-estimated U.S. economic data offset concerns over Europe’s debt crisis.

Five stocks rose for every four that fell in the MSCI Emerging Markets Index, which gained 0.1 percent to 914.99 as of 11:54 a.m. London time. The Shanghai Composite Index climbed 1.2 percent, trimming its drop this year to 22 percent. The Micex Index jumped 0.7 percent in Moscow. The BUX Index slid 1.1 percent in Budapest as parliament approved a law that may curb the central bank’s independence and threaten negotiations on an international aid package.

MSCI’s emerging-markets index has slumped 21 percent this year, while global equity markets have lost $6.3 trillion in value. Data yesterday showed U.S. home sales rose more than economists forecast and jobless claims dropped over the past month to a three-year low. Figures next week may show European manufacturing shrank for a fifth month.

“The recession risk is significantly reduced” in the U.S., Bob Parker, a senior adviser at Credit Suisse Asset Management, said in an interview with Bloomberg UTV today. “I call 2012 a year of moderate growth for America and Asia and a year of very slow recovery from a difficult position in Europe.”

The MSCI gauge’s slump this year is the first since a 54 percent slump in 2008, when Lehman Brothers Holdings Inc. collapsed amid the worsening credit crisis. The developing nations gauge trades at 10 times estimated profit, down from 13.3 times at the end of 2010.

Chinese Stocks

The Shanghai Composite Index rose today even after HSBC Holdings Plc and Markit Economics’ purchasing managers’ index, a gauge of manufacturing, showed a reading of 48.7 for December. That compares with a preliminary result of 49 reported on Dec. 15 and a final reading of 47.7 for November. A reading below 50 indicates a contraction.

OTP Bank Nyrt., Hungary’s largest lender, led declines in Budapest, sliding 1.9 percent as parliament approved a central bank law over the opposition of the International Monetary Fund and the European Union, which cited the legislation for suspending bailout talks earlier this month.

Forint

The forint weakened 0.6 percent against the euro, extended its 11 percent annual drop, the biggest slump since at least 1999.

Poland’s zloty depreciated 1.2 percent versus the European common currency. The WIG20 Index slid 0.4 percent in Warsaw.

The lira appreciated 1.7 percent against the dollar as Bloomberg HT television reported that Turkey’s central bank sold $750 million in its daily dollar auction.

The rand strengthened 1 percent as gold rebounded, extending an 11th annual gain, in London.

The BSE India Sensitive Index, or Sensex, retreated 0.6 percent in Mumbai.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose six basis points, or 0.06 percentage point, to 425, 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 fell one basis point to 348, according to data provider CMA.

--With assistance from Zhang Shidong in Shanghai. Editors: Linda Shen, Ash Kumar

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net.

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


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