Bloomberg News

Most Emerging Stocks Falls as China Data Counters German Growth

May 15, 2012

Most emerging-market stocks retreated as concern that Europe will struggle to contain the debt crisis and falling foreign investment in China countered German economic growth that beat estimates.

Declining stocks outnumbered advancers by 370 to 277, with the MSCI Emerging Markets Index (MXEF) trading little changed at 952.24 as of 1:39 p.m. in London, having swung between gains and losses in earlier trading.

Russia’s 30-stock Micex Index gained for the first time in five days after the country’s statistics service said the economy grew 4.9 percent in the quarter, beating estimates. Anglo American Plc, the mining company that makes up about 8 percent of South Africa’s benchmark, jumped as much as 1.7 percent as commodities rose for the first time in ten days. Polish, Hungarian and Turkish stocks declined.

Germany grew more than expected in the first quarter, helping the euro area avoid its second recession in three years as growth in the region’s largest economy offset contractions in peripheral countries. Foreign direct investment in China fell for a sixth month in April, underscoring the risk of a deeper slowdown in the world’s second-largest economy after April export and import gains missed estimates and industrial output growth was the slowest since 2009.

“China’s growth is slowing down; hopefully it will remain positive because that’s very important for the rest of the world,” Ian Cruickshanks, head of strategic research at Johannesburg-based Nedbank Group Ltd., said by phone. “The European Union is their primary export market and if that’s close to recession, it just says China has to slow down and so the whole of the commodity-producing emerging-market zone has to slow down too.”

New York Manufacturing

Manufacturing in the New York region expanded more than forecast in May as shipments surged and new orders improved, according to the Federal Reserve Bank of New York’s general economic index.

The emerging-markets index declined for an eighth straight week on May 11, its longest stretch of five-day losses since 2008. The index trades at 10.1 times estimated earnings and has added 3.7 percent this year, compared with the 11.9 multiple for the MSCI World Index (MXWO) of advanced nations, which has added 3.4 percent in 2012.

Gross domestic product in Germany, Europe’s largest economy, rose 0.5 percent from the fourth quarter, when it fell 0.2 percent, the Federal Statistics Office said in Wiesbaden today. Economists predicted a 0.1 percent gain, according to the median of 40 estimates in a Bloomberg News survey.

Greek President Karolos Papoulias failed to form a unity government, extending the nation’s political gridlock that has left the country without a government since the inconclusive elections on May 6. Moody’s Investors Service also cut the credit ratings of 26 Italian banks.

In Russian, the Micex Index gained as much as 0.3 percent, trimming its decline this year to 4.6 percent.

Commodities

Anglo American Plc (AAL), the largest mining investor in South Africa, gained as Standard & Poor’s GSCI index of commodities broke a nine-day losing streak, rising as much as 0.4 percent. Johannesburg’s All Share index added 0.1 percent.

Poland’s WIG 20 Index retreated 0.4 percent as Netia SA (NET), the country’s second-largest fixed-line phone company, slipped 1.8 percent after posting a net loss in the first quarter. The PX Index (PX) in the Czech Republic declined 1 percent to the lowest since Jan. 9. Erste Group Bank AG (EBS) of Austria slid 2.8 percent. Hungary’s BUX Index (BUX) retreated less than 0.1 percent. Turkish stocks (XU100) fell 0.7 percent, a second day of losses.

China Stocks

China’s Shanghai Composite Index fell 0.3 percent. A government report showed today China’s foreign direct investment in April fell 0.7 percent from a year earlier and Pacific Investment Management Co. said the nation’s economic slowdown may deepen.

Hon Hai Precision Industry Co. (2317), an assembler of Apple Inc.’s iPad and iPhone, fell in Taipei after profit margins declined. China Southern Airlines Co. (1055), Asia’s biggest carrier by passenger volume, lost 4.6 percent in Hong Kong after it reduced flights to the Philippines. China Shipping Container Lines Co. rallied on plans to add Europe peak-season levies.

The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps declined two basis points to 309, according to data compiled by Bloomberg.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 380, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net and Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

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


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