Bloomberg News

Emerging Stocks Rise to 3-Month as Europe Concerns Ease

August 06, 2012

Emerging-market stocks rose to the highest level in almost three months after creditors said Greece is making progress on meeting bailout terms and as higher-than- estimated U.S. payrolls boosted the outlook for exporters.

The MSCI Emerging Markets Index (MXEF) rose 1 percent to 962.86 as of 9:01 a.m. in London, poised for its highest close since May 11. Samsung Electronics Co. (005930), which got 35 percent of its sales from America and Europe last year, advanced 4.4 percent in Seoul. Hon Hai (2317) Precision Industry Co. jumped the most since September 2008 in Taipei on a plan to renegotiate the price for a stake in Sharp Corp.

Greece and its creditors agreed on the need for more budget cuts to comply with bailout terms after more than a week of meetings in Athens. Employers in the U.S. added 163,000 workers last month, helped by a pickup at automakers and health-care providers, compared with a revised 64,000 increase in June, according to the Labor Department data on Aug. 3.

The stock gains are a “reaction to less negative news coming out of the U.S. and everywhere else,” Raymond Tang, who helps oversee 32 billion ringgit ($10 billion) as chief investment officer at CIMB-Principal Asset Management Bhd., said by phone in Kuala Lumpur. “The U.S. numbers are better but not everything is better. The market wants to look at it as a glass half-full, which means there’s hope the global situation may not be as bad.”

Representatives from the so-called troika of the European Commission, European Central Bank and International Monetary Fund met with Greek Finance Minister Yannis Stournaras in Athens yesterday at the conclusion of the meetings. The talks will determine whether Greece continues receiving funds from the country’s 240 billion euros ($297 billion) of rescue packages.

Kospi Surges

The 21 countries in the MSCI gauge send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show.

South Korea’s Kospi (KOSPI) index surged 2 percent, the biggest gain among benchmark indexes in emerging markets today, while the won rose 0.5 percent, the most this month. The Shanghai Composite Index (SHCOMP) had its best two-day rally since May as regulators broadened measures to boost confidence in stocks. Malaysia’s ringgit strengthened 0.7 percent to an 11-week high, leading gains among Asian currencies.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong gained 1.6 percent, while Taiwan’s Taiex index rose 1 percent. The BSE India Sensitive Index added 1.2 percent and Vietnam’s VN Index gained 1.2 percent.

PKO Bank Polski

Turkey’s ISE National 100 Index (XU100) gained 0.6 percent. The Micex Index slipped 0.1 percent in Russia. The FTSE/JSE Africa All Share Index (JALSH) fell 0.1 percent in Johannesburg.

The WIG20 Index (WIG20) rose 0.6 percent in Warsaw. PKO Bank Polski SA (PKO), Poland’s largest bank, jumped 0.8 percent after it said first-half net income rose to 1.95 billion zloty ($590 million) from 1.84 billion zloty a year earlier.

The Shanghai Composite rose 1 percent, taking its two-day rally to 2.1 percent. China plans to let workers choose for as much as 30 percent of their wages to be paid in the shares of their publicly-traded employers. The stock used to pay employees must be acquired from the secondary market, according to draft rules posted on the China Securities Regulatory Commission’s website yesterday.

Samsung Electronics, the world’s largest maker of televisions and mobile phones, rose the most since July 27. The stock has the biggest representation on the MSCI Emerging Markets Information Technology Index, which led gains in the broader emerging-market gauge.

Hon Hai, flagship of the Foxconn Technology Group, surged 7 percent after saying the price renegotiation with Sharp will lead to cancellation of previous losses on the deal. Foxconn Technology Co., (2354) Hon Hai’s affiliate that also plans to invest in Sharp, surged 6 percent.

HTC Corp. (2498), Asia’s second-largest smartphone maker, fell 6.9 percent in Taipei, its lowest level since February 2010, after forecasting revenue that missed analyst estimates.

To contact the reporters on this story: Gan Yen Kuan in Kuala Lumpur at ykgan@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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