Bloomberg News

Emerging Stocks Rebound as Brazilian Steelmakers Advance

May 10, 2012

Emerging-market stocks rose from a four-month low as falling U.S. jobless claims and a bailout payment for Greece bolstered Russian equities, overshadowing declines in Brazil’s bourse.

The MSCI Emerging Markets Index (MXEF) climbed 0.3 percent to 980.69 at the close in New York, advancing for the first time in six days. Utilities and consumer companies led gains. OAO NovaTek, Russia’s second-largest natural gas producer, rose the most since July before it reports earnings tomorrow. Brazil’s Bovespa Index (IBOV) retreated for a third day, paring earlier gains of as much as 1.6 percent.

Claims for U.S. unemployment benefits dropped to the lowest level in a month, allaying concerns of a global economic slowdown and boosting the Standard & Poor’s 500 Index 0.3 percent. Greece, which owes about 400 billion euros ($517 billion) to private bondholders and public bodies, will get 4.2 billion euros from its rescue fund today, according to the European Financial Stability Facility.

“This is a sigh of relief in the near term,” Benoit Anne, the head of emerging markets at Societe Generale SA, said by phone today from London. “It’s looking like Greece’s installment of cash is going to be disbursed and that’s very good news for short-term sentiment.”

The developing-nations index is valued at 10.4 times estimated profit and has gained 7 percent this year, compared with the 12.1 multiple for the MSCI World Index (MXWO), which has added 5.3 percent this year.

Earnings in Brazil

The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF (EEM:US) tracking developing-nation shares, added 0.4 percent to $40.49 today.

The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, fell 3.3 percent to 28.53.

Braskem SA (BRKM5), Latin America’s largest petrochemicals maker, slipped 4.6 percent in Sao Paulo after it posted first-quarter profit that fell 50 percent on soaring costs and a weaker local currency that boosted the value of its dollar-denominated debt. Brazil’s Bovespa fell 0.1 percent.

Micex Climbs

Russia’s Micex (INDEXCF) benchmark index added 1.8 percent, the biggest gain since April 19, as NovaTek climbed 5.5 percent. The company will report first-quarter earnings tomorrow and will probably say sales grew 7.5 percent to $1.65 billion, according to the median estimate of eight analysts surveyed by Bloomberg.

OAO Mechel, the country’s largest coking-coal producer, gained 5.4 percent, the most since January. The company said profit climbed 11 percent last year on increased prices and higher sales.

The FTSE/JSE Africa All Shares Index (JALSH) rose 1.3 percent in South Africa and the ISE National 100 Index (XU100) jumped 1.3 percent in Turkey. The BSE India Sensitive Index (SENSEX), or Sensex, fell 0.4 percent.

Chinese exports grew 4.9 percent in April from a year earlier, trailing a forecast for an 8.5 percent rise by analysts in a Bloomberg News survey.

“China’s export and import figures, which came out this morning, were substantially worse than expected,” indicating that “the economy is slowing,” Slava Smolyaninov and Leonid Slipchenko, analysts at UralSib Financial Corp. in Moscow, wrote in a note to clients. “European debt problems are also on investors’ radar with ongoing problems in Greece and now Spain.”

Chinese stocks listed on the Hang Seng China Enterprises Index (HSCEI) dropped 0.6 percent for a sixth day of losses. PetroChina Co. (857) slid to the lowest level in more than four months after the government cut fuel prices.

The company, Hong Kong’s second-biggest oil refiner, slid for a seventh day, losing 2 percent.

Gross Cuts Holdings

Bill Gross, who runs the world’s biggest bond fund, cut his holdings of emerging-market debt to a two-year low, selling assets from an area where the International Monetary Fund says growth will slow. He reduced the securities to 7 percent of assets in Pacific Investment Management Co.’s Total Return Fund in April from 10 percent in March.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 355, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Jason Webb in London at jwebb25@bloomberg.net; Christine Harvey in New York at charvey32@bloomberg.net

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


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Companies Mentioned

  • EEM
    (iShares MSCI Emerging Markets ETF)
    • $45.06 USD
    • -0.07
    • -0.16%
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