Bloomberg News

Emerging Stocks Fall for Third Day on Worsening Europe Crisis

July 24, 2012

Emerging-market stocks dropped for a third day on concern Europe’s debt crisis is worsening, overshadowing an improving outlook for China’s manufacturing.

The MSCI Emerging Markets Index (MXEF) fell 0.2 percent to 910.66 at 12:26 p.m. in London, set for its lowest close since June 28 as 335 stocks retreated and 282 rose. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong declined 0.6 percent. OAO Gazprom Neft, the oil arm of Russia’s gas monopoly, slipped 1.8 percent as energy companies led emerging stocks lower.

A preliminary reading of manufacturing in China was 49.5 in July, which if confirmed would be the highest since February, according to a purchasing managers index compiled by HSBC Holdings Plc and Markit Economics. A reading under 50 indicates contraction. Spain paid higher yields as it sold 3.05 billion euros (£3.7 billion) of three- and six-month bills at auction.

“While signs of an acceleration in Chinese economic growth would prove positive for the global growth outlook, it still faces significant downside risks from the escalating euro-zone sovereign debt crisis,” Lee Hardman, an analyst at Bank of Tokyo-Mitsubishi UFJ in London, wrote in an e-mailed note to clients.

A gauge of energy companies slid 0.8 percent. The MSCI Emerging Markets Index has slid 2.9 percent this month, compared with a 2 percent decline by the MSCI World Index. (MXWO)

Cnooc Ltd. (883), China’s largest offshore oil and natural-gas explorer, fell 4 percent in Hong Kong, the most since May 7, on concern the company is overpaying in its $15.1 billion acquisition of Nexen Inc.

Gazprom

The Micex Index slipped 0.1 percent in Russia. OAO Gazprom, the world’s largest natural gas producer, fell 1.6 percent, heading for its third consecutive decline.

OAO Rosneft, Russia’s biggest oil producer, climbed 1.2 percent, after the company began talks to buy BP Plc’s stake in TNK-BP, adding another bidder for the U.K. producer’s shares in the Moscow-based venture.

The Mexican peso depreciated 1.1 percent against the dollar and the rand (ZAR:US) weakened 0.8 percent. The lira fell 0.4 percent and the ruble lost 0.2 percent.

The FTSE/JSE Africa All Share Index (JALSH) jumped 0.7 percent in Johannesburg and the ISE National 100 Index (XU100) gained 0.7 percent in Turkey. Turkiye Halk Bankasi AS (HALKB), Turkey’s biggest listed state-run bank, gained 2.2 percent after reporting higher second-quarter profit.

Shanghai Composite

The Shanghai Composite Index (SHCOMP) rose from its lowest level since 2009, adding 0.2 percent. The Taiex Index (TWSE) lost 0.3 percent in Taipei. Vietnam’s VN Index (VNINDEX) tumbled 1.5 percent, the most since July 9.

The Sensitive Index, or Sensex (SENSEX), added 0.2 percent in Mumbai. Hindustan Unilever Ltd. (HUVR), a unit of the world’s second- largest consumer goods company, jumped 7.5 percent, after first- quarter net income rose.

The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps rose one basis point, or 0.01 percentage point, to 277.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell one basis points to 362, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net.

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


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