Bloomberg News

Emerging-Market Stocks Climb as Suppliers to Apple Gain

March 23, 2012

Emerging-market stocks gained for the first time in seven days, reducing their weekly decline, as rising oil prices boosted energy producers and outweighed concern that a slowing Chinese economy may damp global growth.

The MSCI Emerging Markets Index (MXEF) advanced 0.1 percent to 1041.96 at the close in New York, led by health care companies. The measure has slumped 2 percent this week, the biggest five- day decline since the period ended Dec. 16. Energy companies were the worst performer on the week, sliding 3.8 percent after a 0.4 percent rebound today.

Sinopharm Group Co. (1099), China’s largest drug distributor, jumped 5.3 percent today in Hong Kong to a seven-month high, after reporting sales that exceeded some analysts’ estimates. HRT Participacoes em Petroleo SA, a Brazilian oil explorer, gained the most in three weeks. Russia’s Micex Index (INDEXCF) snapped a six-day drop as oil surged almost $3 a barrel.

Crude oil for May delivery rose 1.4 percent to settle at $106.87 a barrel on the Nymex. It touched $108.25 a barrel, the highest intraday price since March 2, after Reuters reported Iranian oil exports will drop by 300,000 barrels a day this month because of tighter sanctions.

“Commodities have really given a boost to commodity- intensive stocks markets,” Neil Shearing, chief emerging- markets economist at Capital Economics Ltd. in London, said by phone. “The issue now is whether the macro data is going to hold up and continue to improve or whether we’re at a turning point.”

Emerging-market stocks have gained 14 percent this year, compared with an 11 percent advance for shares on the MSCI World Index (MXWO) of developing nations. Priced at 10.7 times estimated earnings, developing-country stocks are cheaper than developed- market shares, which trade for 13.1 times analysts’ earnings estimates.

The iShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF that tracks developing-nation shares, jumped 0.8 percent to $42.90. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, slid 3.3 percent to 25.10.

A leading economic index for China rose 0.8 percent in February from the previous month, the Conference Board said today, citing a preliminary reading. That compares with a 1.5 percent gain in January that was revised down from 1.6 percent. Purchases of new homes in the U.S. unexpectedly fell in February for a second month, with sales dropping to a 313,000 annual pace, the slowest since October, figures from the Commerce Department showed today in Washington.

Brazil’s Bovespa was little changed today and recorded a 2.8 percent weekly loss, the largest in three months. OGX Petroleo & Gas Participacoes SA (OGXP3) had the biggest drop since October today, retreating 4.5 percent, after its 2011 net loss widened compared with a year earlier.

China, Russia

The Hang Seng China Enterprises Index (HSCEI) of Chinese stocks listed in Hong Kong tumbled 1 percent in the eighth day of declines, the longest losing streak since July 2010. Agricultural Bank of China Ltd. dropped 3.1 percent in Hong Kong trading after net income fell.

The Micex added 0.7 percent in Moscow as oil producer OAO Tatneft (TATN) gained 1.9 percent and OAO Lukoil (LKOH), Russia’s biggest non- state crude company, rose 0.9 percent, climbing for the first time in six days.

Emerging-market stock funds took in $782 million in the week ended March 21 for a 12th consecutive week of inflows and the longest run of gains since 2010, according to EPFR Global. Net investment into developing-nation equity funds has totaled $25.72 billion in 2012, compared with outflows of $24.46 billion for the same period of 2011, according to a report e-mailed today by the Cambridge, Massachusetts-based data provider.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose four basis points, or 0.04 percentage point, to 334 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Anuchit Nguyen in Bangkok at anguyen@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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