Bloomberg News

Emerging Stocks Gain on Greek Austerity, China’s ‘Fine Tuning’

February 14, 2012

Feb. 13 (Bloomberg) -- Emerging-market stocks rebounded from the biggest drop in more than two months after Greek lawmakers approved austerity plans and China’s premier said the nation needs to start “fine-tuning” economic policies.

The MSCI Emerging Markets Index added 0.8 percent to 1,050.73 as of 1 p.m. London time, following a 1.8 percent slide on Feb. 10. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 0.6 percent. The Micex Index jumped 2.3 percent in Moscow, the most since Jan. 3, as oil rose. Turkish stocks gained 2 percent. The PX Index jumped 2.6 percent in Prague as Erste Group Bank AG gained.

Greek Prime Minister Lucas Papademos won parliamentary approval for austerity measures to secure an international bailout as rioters protesting the measures battled police and set fire to buildings in downtown Athens. China’s economic circumstances in January and the first quarter deserve attention, Premier Wen Jiabao told business executives last week in Beijing, the official Xinhua News Agency reported yesterday.

“Greece will inevitably dominate headlines at the start of the new week, just as it did for most of last week,” Chris Weafer, chief strategist at Troika Dialog in Moscow, wrote in an e-mailed note to clients. “While the outcome of the debt and deficit reduction talks are critical for short-term sentiment,” attention will shift to economic data from China and the U.S.

China Construction Bank Corp. led Chinese stocks in Hong Kong higher, gaining 1.3 percent.

China Lending

Wen’s remarks were released after China’s new lending missed estimates by 26 percent in January and money supply grew the least in more than a decade, according to data released by the central bank on Feb. 10 after the market closed.

While Wen “did not specify what types of policy adjustments were being contemplated, it would be remarkable if lower bank reserve requirements were not one of them,” Michael Derks, chief strategist at FXPro Financial Services Ltd. in London, wrote in an e-mail.

Sales at U.S. retailers probably increased in January by the most in four months, economists said before a Commerce Department report due tomorrow.

OAO Sberbank, Russia’s biggest lender, added 2.2 percent and OAO Gazprom, the world’s largest natural-gas producer, gained 2.1 percent in Moscow. Oil jumped as much as 1.3 percent in New York.

The FTSE/JSE Africa All Share Index rose 0.9 percent in Johannesburg, as prices gained for precious and industrial metals.

Banks led emerging-market stocks higher as concern eased that Greece will have disorderly default.

Banks Gain

Turkiye Garanti Bankasi AS jumped 2.1 percent in Turkey, as the ISE National 100 Index was on course for its biggest gain since Feb. 1. Erste Group Bank surged 4.1 percent in Prague, helping the PX Index gain 2.5 percent. OTP Bank Nyrt. climbed 1.7 percent in Budapest as the BUX Index rose 1.1 percent.

In Asian markets, Taiwan’s Taiex Index and South Korea’s Kospi index climbed 0.6 percent. The BSE India Sensitive Index, or Sensex, added 0.1 percent.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell seven basis points, or 0.07 percentage point, to 380, 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 declined five basis point to 292, according to data provider CMA.

--Editors: Peter Branton, Stephen Kirkland

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net Jason Webb in London at jwebb25@bloomberg.net.

To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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