Bloomberg News

Most Emerging Stocks Advance as Crude Sinks Energy Shares

November 26, 2012

Most emerging-market stocks rose, led by consumer companies, as Japan said it will act to stimulate its economy, while sliding oil prices drove a decline in Brazilian and Russian shares.

Kangwon Land Inc. (035250), the South Korean casino and hotel operator, surged 13 percent after winning approval from the government to expand its gambling business. United Co. Rusal, the world’s biggest aluminum producer, rallied to the highest level in almost two months in Moscow. A gauge of energy companies in the MSCI Emerging Markets Index (MXEF0CD) had the second- largest drop after telecommunications shares. Brazilian oil and gas explorer OGX Petroleo e Gas Participacoes SA tumbled.

The emerging markets measure retreated 0.1 percent to 995.10 in New York as 430 stocks rose and 334 fell. Crude sank as European finance chiefs met to negotiate a bailout payment for Greece and as the U.S. seeks a resolution to its so-called fiscal cliff. Minutes of the Bank of Japan’s Oct. 30 meeting showed policy makers will continue easing monetary policy to stimulate Asia’s second-largest economy.

“General risk sentiment has improved,” Christian Keller, the head of emerging-market research at Barclays Plc. in London, said by phone. “Globally, it remains a mixed picture. It’s still not very clear on the real economy.”

Brazil’s Bovespa Index (IBOV) lost 1.5 percent and Russia’s Micex Index (INDEXCF) fell 0.7 percent as crude oil futures dropped in New York. The Shanghai Composite Index slid 0.5 percent before the release of data on industrial profits tomorrow. Benchmark indexes in Turkey and the Czech Republic gained more than 0.6 percent. The BSE India Sensitive Index rose 0.2 percent.

Egypt Rebounds

Egypt’s benchmark stock index surged 2.6 percent, rebounding from the lowest level since July. The gauge tumbled the most in 22 months yesterday amid clashes between supporters and opponents of President Mohamed Mursi after he issued a decree granting himself sweeping powers. The Egyptian pound weakened 0.2 percent against the dollar today, the most since September 2011, based on closing prices.

Taiwan’s Taiex Index (VXEEM) jumped 1.1 percent to the highest level in five weeks after Premier Sean Chen asked the government to prepare a proposal to boost stocks. The Philippine Stock Exchange Index rose 0.5 percent to a record after JPMorgan Chase & Co. said it remains bullish on the Southeast Asian nation and expects corporate earnings to accelerate.

The iShares MSCI Emerging Markets Index exchange-traded fund (EEM:US), the ETF tracking developing-nation shares, was little changed at $41.64 in New York. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, climbed 5.9 percent, the biggest jump since Oct. 23.

‘General Weakness’

“Across the board, there seems to be a general weakness, but it doesn’t seem to be terribly discerning weakness,” Stephen Wood, chief markets strategist for North America at Russell Investments, said by phone in New York. “It’s a choppy data environment, it’s a choppy policy environment, so it’s reasonable to expect that it’s a choppy market environment.”

Yields on Hungary’s five-year bonds rose to the highest level in a week after Standard & Poor’s downgraded the country’s debt late on Nov. 23, citing “unorthodox” tax policies pursued by Prime Minister Viktor Orban’s government.

A gauge of consumer discretionary stocks in the emerging- markets gauge rose 0.6 percent, the most of the 10 industry groups. The broader index has climbed 8.6 percent this year, trailing the 10 percent gain in the MSCI World Index (MXWO) of developed-country equities. The developing-nations gauge trades for 11.4 times estimated earnings, compared with the MSCI World’s 13.4 multiple, according to data compiled by Bloomberg.

PDG Slumps

Homebuilder PDG Realty SA Empreendimentos e Participacoes fell 5.4 percent in Sao Paulo, the biggest decliner on the emerging markets gauge. Analysts covering Brazil lowered their 2012 and 2013 economic growth forecasts for the second straight week.

OGX, the crude producer controlled by the billionaire Eike Batista, slid 5.3 percent after the company denied a report by Exame magazine that it was in talks to sell a stake in fields at the Campos basin.

Kangwon Land jumped to a record-high after receiving approval for its plan to increase casino tables and slot machines, according to a regulatory filing on Nov. 23 after the Korean market closed.

Samsung Slips

Rusal, which holds a 25 percent stake in Russian miner OAO GMK Norilsk Nickel, rose 1.7 percent on the Micex on speculation billionaire Roman Abramovich may buy a stake in Norilsk, leading to a boost in dividends. Oleg Deripaska, Rusal’s chief executive officer, is urging fellow billionaire Abramovich to buy a stake in Norilsk, said three people familiar with the matter who asked not to be identified because talks are preliminary.

Samsung Electronics Co. slid 2.3 percent in Seoul, ending a five-day, 10 percent rally. Apple Inc. sought to add infringement claims over six more Samsung products including the Galaxy Note II to its multi billion-dollar patent lawsuit against the South Korean company, according to filings in San Jose federal court in California.

SP Setia Bhd. (SPSB), Malaysia’s biggest property developer, dropped 5.3 percent. The stock will be removed from the MSCI Malaysia Index at the end of the week, according a MSCI Inc. statement on Nov. 14.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries added 1 basis point, or 0.01 percentage point, to 295 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Maria Levitov in London at mlevitov@bloomberg.net; Victoria Stilwell in New York at vstilwell1@bloomberg.net

To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net; Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • EEM
    (iShares MSCI Emerging Markets ETF)
    • $41.02 USD
    • 0.29
    • 0.71%
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