Bloomberg News

Emerging-Market Stocks Post Longest Rout Since August on China

November 13, 2012

Emerging-market stocks fell for a fourth day, led by energy companies, on speculation China will expand a property tax trial and as European officials delayed a decision on Greek aid.

OAO Gazprom, Russia’s biggest company, sank to the lowest since May. Diagnosticos da America SA (DASA3) tumbled in Sao Paulo after reporting earnings that fell short of analyst estimates. Evergrande Real Estate Group Ltd. (3333) and Poly Property Group Ltd. (119) retreated in Hong Kong. The MSCI Emerging Markets Index (MXEF) lost 0.7 percent to 982.17 at the close of trading in New York, posting the longest stretch of declines since Aug. 30.

China’s housing ministry is on “high alert” if both transaction volume and home prices increase “substantially,” Xinhua News Agency reported, citing Minister of Housing and Urban-Rural Development Jiang Weixin. European leaders have put off until next week a decision on how to cover Greece’s additional funding needs, while giving the nation two years to bring down its budget gap.

“The situation in Europe continues to create an overhang for markets while reports on China’s property tax are adding to the pressure,” said Allan Yu, who helps manage $10.3 billion in Manila-based Metropolitan Bank & Trust (MBT) Co.

The developing nations stock measure has risen 7.2 percent this year, lagging a 7.5 percent increase in the MSCI World Index of developed countries. The emerging-markets gauge trades at 11.3 times estimated earnings, compared with the MSCI World’s multiple of 13.1, data compiled by Bloomberg show.

Extra Yield

The iShares MSCI Emerging Markets Index exchange-traded fund (EEM:US), the ETF tracking developing-nation shares, slumped 0.9 percent. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, increased 0.3 percent.

The MSCI Emerging Markets/Energy Index (MXEF0EN) and the MSCI Emerging Markets/Materials Index fell to the lowest level in two months as oil and commodities retreated for a second day.

Russia’s Micex Index dropped 2.4 percent to a July low and the Czech Republic’s PX index fell 1.2 percent, declining for a fifth day. Brazil’s Bovespa index gained 0.7 percent.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose two basis points, or 0.02 percentage point, to 301, according to JPMorgan Chase & Co.’s EMBI Global Index.

Property Tax

The Hang Seng China Enterprises Index (HSCEI) slumped 2 percent to the lowest level since Oct. 10. The Shanghai Composite Index fell 1.5 percent while Taiwan’s Taiex index retreated 1.8 percent.

Evergrande Real Estate tumbled 4.2 percent, while Poly Property lost 1.5 percent. The government imposed a property tax for the first time in Shanghai and Chongqing and raised down payment and mortgage requirements in its more than two-year effort to curb the property market.

PetroChina Co. plunged 8.5 percent while China Petroleum and Chemical Corp. slid 3 percent in Hong Kong trading after the Beijing Times said China may cut gas prices tomorrow. Gazprom tumbled 3.6 percent to the lowest since May 23.

HTC Corp. (2498), Asia’s second-largest smartphone maker, sank 6.8 percent in Taipei as Credit Suisse Group AG and Bank of America Merrill Lynch reiterated their underperform rating.

Dasa, Sberbank

Diagnosticos da America, the medical-diagnostics firm known as Dasa, tumbled 5.3 percent, the most since July. The company posted adjusted net income of 26.9 million reais in the third quarter, missing an average estimate of 41 million reais, according to data compiled by Bloomberg. Homebuilder Gafisa SA (GFSA3) gained 6.3 percent after posting third-quarter earnings that beat estimates.

Charoen Pokphand Foods Pcl (CPF) declined 6.3 percent in Bangkok, the most in four months, as UBS AG offered to sell shares at below market prices.

OAO Sberbank dropped in Moscow, retreating 2.7 percent. The ruble fell to the weakest level in two months.

New World Resources Plc (NWR) sank to the lowest since April 2009, losing 5.9 percent, as analysts estimate the Czech coal company will post its first quarterly loss since 2010 tomorrow.

To contact the reporters on this story: Ian Sayson in Manila at isayson@bloomberg.net; Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

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


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Companies Mentioned

  • EEM
    (iShares MSCI Emerging Markets ETF)
    • $42.35 USD
    • 0.53
    • 1.25%
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