Bloomberg News

Emerging Stocks Climb as Greek Swap Victory Buoys Market

March 09, 2012

Emerging-market stocks rose, paring the first weekly loss in four, as Greece’s private creditors agreed to a debt swap and employers in the U.S. added more jobs than expected, bolstering the outlook for global growth.

The MSCI Emerging Markets Index (MXEF) advanced 0.7 percent to close at 1,060.01 in New York, trimming this week’s drop to 1.8 percent. Technology companies led gains, with Samsung Electronics Co. reaching a record high in Seoul. Hungarian stocks gained 1.2 percent as OTP Bank Nyrt. (OTP), the nation’s largest lender, climbed 3.4 percent. Benchmarks in Brazil and Mexico declined after an industry group ruled that Greece’s debt restructuring will trigger payouts of default insurance.

U.S. employers boosted payrolls by 227,000, exceeding the median projection for an increase of 210,000 in a Bloomberg survey of economists. Greece’s debt swap, the biggest sovereign restructuring in history, allowed the nation to activate collective action clauses forcing investors to take losses. The International Swaps & Derivatives Association said the deal will be considered a “credit event” and credit-default swaps on the debt may now be settled.

“One more chapter in the Greek debt saga is nearing its end,” said Andreas Koutras, a partner at In Touch Capital Markets in London. “This does not solve the number of problems in Greece. It gives, however, political impetus to the process.”

The MSCI Emerging Market Index has risen 16 percent this year, beating the 9.2 percent gain on the MSCI World Index. The developing-nation gauge trades at 10.7 times estimated earnings, compared with a multiple of 12.9 for the developed-market index.

Bull Market

Today is the three-year anniversary of the bull market in U.S. stocks that followed the global financial crisis. The Standard & Poor’s 500 Index has rallied 103 percent from its 12- year low reached on March 9, 2009, while the MSCI All-Country World Index (MXWD) jumped 91 percent.

Emerging-market stock funds took in $907 million in the week ended March 7, the 10th week of inflows and the longest run of gains since 2010, according to EPFR Global. Net investment into developing-nation equity funds has totaled $22.6 billion in 2012, compared with outflows of $19.6 billion for the same period of 2011, according to a report e-mailed today from the Cambridge, Massachusetts-based data provider.

The iShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF that tracks developing-nation shares, was little changed at $43.79, down 1.9 percent in the week.

Brazil’s Bovespa fell 0.3 percent, after earlier advancing as much as 0.8 percent, extending its weekly loss to 1.6 percent. Iron ore miners MMX Mineracao & Metalicos SA (MMXM3) and Vale SA (VALE5) led losses for the week.

Hang Seng

The IPC Index (MEXBOL) slid 0.3 percent in Mexico, led by exchange operator Bolsa Mexicana de Valores SA, which slumped 2.5 percent.

Hungary’s BUX Index (BUX) gained for a second day to pare this week’s loss to 2.6 percent.

The Hang Seng China Enterprises Index (HSCEI) advanced 0.8 percent after China’s National Bureau of Statistics said consumer prices rose 3.2 percent in February from a year earlier, less than a median estimate of 3.4 percent in a Bloomberg survey of 35 economists and trailing January’s 4.5 percent advance.

“If growth in China shows further weakness, there could be further loosening of monetary policy,” said Michiya Tomita, a Hong Kong-based fund manager at Mitsubishi UFJ Asset Management Co., which oversees $65 billion. “That should support equities.”

Bond Yields

Industrial & Commercial Bank of China Ltd. advanced 1 percent in Hong Kong, while Agricultural Bank of China Ltd., the nation’s third-biggest lender by market value, rose 1.1 percent today.

Samsung Electronics (005930), the biggest electronics exporter in Asia, rose 4.2 percent to a record in Seoul on speculation its profit estimates will be raised. AU Optronics Corp. (2409) rose 3.6 percent in Taipei after reporting an increase in February sales.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries declined four basis points, or 0.04 percentage points, to 341 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net; Gavin Serkin at gserkin@bloomberg.net


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