Emerging Stocks Head for Biggest Drop in Week on Growth Concern
February 23, 2012, 8:06 PM ESTBy Berni Moestafa and Jason Webb
Feb. 23 (Bloomberg) -- Emerging-market stocks headed for the biggest decline in a week as reports signaled slowing economic growth and after technology stocks dropped following a profit forecast from Hewlett-Packard Co. that fell short of estimates.
The MSCI Emerging Markets Index retreated 0.6 percent to 1,058.34 at 3:23 p.m. London time, set for the biggest drop since Feb. 16. South Korea’s Kospi Index fell 1 percent, the most in a week, led by Samsung Electronics Co., Asia’s biggest exporter of consumer electronics. The ISE National 100 Index slid 1.8 percent in Istanbul. Brazil’s Bovespa Index fell 0.5 percent, while Mexico’s IPC Index lost 0.1 percent.
Samsung Electronics paced losses by technology companies on the MSCI Index, which has rallied at almost double the rate of world stocks this year, after Hewlett-Packard said revenue from personal computers, servers and printers declined in the three months ended in January. The 17-nation euro economy will contract 0.3 percent, the European Commission said, abandoning a November forecast of 0.5 percent growth.
“The rally seems to be taking a break, which could be healthy for another leg up when the ECB injects more liquidity with the second 36-month LTRO next week,” analysts at BNP Paribas SA including Bartosz Pawlowski in London wrote in an e- mailed note to clients. The rest of this week could see “consolidation around the current levels,” the analysts wrote.
Global stock markets have rallied since the European Central Bank offered unlimited three-year cash to euro region banks via its longer-term refinancing operations in December, which had a take-up of 489 billion euros. The central bank will offer a second round of LTRO loans on Feb. 29.
The MSCI Emerging Markets Index has gained 15 percent so far this year, compared to an 8.7 percent increase in the MSCI World Index.
Technology Stocks
A gauge of technology companies fell 1.5 percent, the most among the 10 industry groups on MSCI’s emerging-markets index. Samsung sank 3.1 percent. Taiwan Semiconductor Manufacturing Co., lost 2 percent in Taipei, helping to drag the Taiex Index down 0.8 percent.
The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong slipped 0.9 percent. The Shanghai Composite Index fell 0.3 percent.
Turkish stocks retreated for a third day. Morgan Stanley cut Turkish shares to “underweight” from “equalweight” in its emerging Europe, Middle East and Africa portfolio, it said in an e-mailed report today, citing fair valuation after gains this year and rising risks.
The PX Index slid 1.9 percent in Prague as Erste Group Bank AG tumbled 4.1 percent.
The FTSE/JSE Africa All Share Index gained 0.3 percent. Steinhoff International Holdings Ltd., Africa’s largest furniture maker, climbed 4.6 percent after reporting a rise in first-half earnings after the market close yesterday.
Rand Gains
South Africa’s rand strengthened 0.6 percent against the dollar after Finance Minister Pravin Gordhan said a move to rein in the budget deficit faster than planned will shield the economy and prevent a credit-rating downgrade.
The Sensitive Index, or Sensex, slipped 0.4 percent in Mumbai. Bharti Airtel Ltd. fell 2.6 percent after Econet Wireless Ltd. said it filed a lawsuit for $3.1 billion in damages from India’s biggest mobile-phone operator over the disputed acquisition of a Nigerian unit.
The Russian stock market was closed for a holiday.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell two basis points, or 0.02 percentage point, to 363 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
--Editors: Peter Branton, Linda Shen
To contact the reporters on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net.
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
