Bloomberg News

Emerging Stocks Rise as Greece Makes Progress in Debt Deal Talks

January 31, 2012

Jan. 31 (Bloomberg) -- Emerging-market stocks rose, with the benchmark index set for its largest monthly gain since October, after Greek Prime Minister Lucas Papademos said major progress has been made in debt-swap talks.

The MSCI Emerging Markets Index gained 1 percent to 1,015.90 as of 3:21 p.m. Hong Kong time. The index has risen 11 percent this month after falling 20 percent in 2011. Taiwan’s Taiex index advanced 1.5 percent as data showed global funds bought more of the island’s stocks in January. The BSE India Sensitive Index, or Sensex, climbed 1.2 percent.

Papademos told reporters in Brussels today after a European Union summit he’s “strongly committed” to reaching a debt-swap accord with bondholders that is crucial to lowering Greece’s debt burden and freeing up another round of aid before the country faces a 14.5 billion-euro ($19 billion) bond payment on March 20. The European Union is India’s largest trading partner and the largest market for Chinese exports.

“I don’t think we should underestimate that what the markets want is a solution with the short-term financing problem,” Geoff Lewis, head of investment services at JPMorgan Asset Management, said in a Bloomberg Television in Hong Kong today. “Markets are not stupid. They know that there are long- term problems but that’s something to solve in the long term. What they need is liquidity.”

The MSCI Emerging Markets Index’s gain this year has outpaced a 5 percent increase by the MSCI World Index of developed nations. The emerging-markets gauge is valued at 10.2 times estimated profit, compared with the MSCI World’s multiple of 12.1 times, according to data compiled by Bloomberg.

Sensex Advance

“For emerging markets, maybe the first quarter is going to be about the best of the year,” Sean Darby, chief global equity strategist at Jefferies Group Inc., said in a Bloomberg Television interview in Hong Kong today. “Those types of rebounds are very rare and probably are not sustainable. More likely we will get profit-taking in the end over the next six to nine months.”

India’s Sensex has climbed 11 percent in January after slumping 25 percent last year. State Bank of India rose 3.3 percent after it approved selling stock to the government to bolster capital by 79 billion rupees ($1.6 billion). ICICI Bank Ltd. gained 3.2 percent before reporting earnings.

India’s stock market “fell a lot more than others and therefore the bounce back is much faster,” Prabhat Awasthi, head of India research at Nomura Holdings Inc., said in a Bloomberg UTV interview today. “Earnings by and large have not disappointed.”

Foxconn, Huaneng

In Taiwan, global funds bought $1.7 billion more stocks than they sold in January, the most in three months, exchange data showed. Foxconn Technology Co. jumped 6.9 percent to the highest level since Aug. 5, on speculation Apple Inc. may use metal casings for its next generation iPhone, benefiting companies including Foxconn. Cheng-Kuang Liu, a Taipei-based Foxconn spokesman, declined to comment on the speculation.

Huaneng Power International Inc., the listed unit of China’s largest electricity producer, rose 2.4 percent in Shanghai on speculation a cap on coal prices and a government decision to raise electricity prices will bolster earnings. SAIC Motor Corp., China’s largest domestic carmaker, fell 2.5 percent, the biggest drop since Jan. 13, after saying profit growth declined last year.

South Korea’s Kospi index climbed 0.8 percent, the most since Jan. 20. Daewoo Shipbuilding & Marine Engineering Co., the world’s third-largest shipyard, gained 6.5 percent after winning the world’s first order to build a supertanker in about nine months. Hyundai Heavy Industries Co., the biggest shipyard, advanced 4 percent.

--With assistance from Santanu Chakraborty in Mumbai and Weiyi Lim in Singapore. Editors: Darren Boey, Allen Wan

To contact the reporter on this story: Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net

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


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