Bloomberg News

Emerging-Market Stocks Advance From Two-Month Low on Economy

February 27, 2013

Emerging-market stocks rose from a two-month low, led by automakers, as reports signaled increased confidence in economic recovery and investors speculated China will take steps to support equities.

Hyundai Motor Co. (005380) advanced for the first time in three days in Seoul, while Guangzhou Automobile Group Co. (2238) rallied the most in seven weeks in Hong Kong after UBS AG raised its stock rating. OAO Bashneft, billionaire Vladimir Evtushenkov’s crude producer, gained in Moscow as oil rebounded. Ford Otomotiv Sanayi AS (FROTO) climbed the most in two months after net income beat analysts’ estimates.

The MSCI Emerging Markets Index added 0.2 percent to 1,045.49 at 1:05 p.m. in London. It fell 1.1 percent yesterday as Italy’s inconclusive election revived European debt concerns. Reports yesterday on U.S. new-home sales and consumer sentiment beat estimates and data today indicated economic confidence in the euro area increased more than forecast in February. China is studying allowing the housing provident fund to invest in equities, China National Radio said.

“The latest data boosted investors’ confidence in the direction of the U.S. economy,” Chu Moon Sung, fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $30 billion, said by phone in Seoul.

Eight of the 10 industry groups in the MSCI Emerging Markets Index climbed, with gauges of utilities and consumer discretionary companies leading gains. The 21 countries in the developing-nations gauge send about 26 percent of their exports to the European Union on average and 17 percent to the U.S., data compiled by the World Trade Organization show.

European Outlook

An index of executive and consumer sentiment rose to 91.1 from a revised 89.5 in January, the European Commission said. Economists had forecast an increase to 89.9, according to the median of 29 estimates in a Bloomberg survey. Italy reached its target in a bond sale today as the country’s political stalemate forced the Treasury to offer higher yields.

“The outlook for emerging Europe’s exporters has improved a little,” Neil Shearing, chief emerging-market economist at Capital Economics Ltd. in London, said in an e-mailed report today. “Much still hinges on developments in the euro zone, where the debt crisis is far from resolved. This will continue to cloud the outlook for emerging Europe.”

Russia’s Micex Index gained 0.2 percent and the ruble strengthened for the first time in three days. Bashneft added 1.1 percent, reversing yesterday’s losses, as oil rose as much as 0.5 percent in New York, the first advance in three days. OAO Gazprom, Russia’s biggest energy producer, gained 0.9 percent.

RusPetro Tumbles

RusPetro Plc, an oil producer in Siberia, fell as much as 14 percent, before trading 5.1 percent lower and heading for record-low close in London. The oil company’s condensate output is set to miss its February target and recently started wells have lower than expected flow rates, the company said in a regulatory filing today.

Poland’s WIG20 Index added 0.2 percent. PGE SA (PGE) jumped 3.2 percent in Warsaw, the biggest gain since Jan. 2 on a closing basis, as Citigroup Inc. and Bank Zachodni WBK SA recommended buying shares in the country’s biggest utility.

Trading volume on the Russian and Polish benchmark indexes was 24 percent less than the 30-day average.

Ford Otomotiv, a Turkish carmaker co-owned by Ford Motor Co. and Koc Holding AS, rose 4.1 percent after the company said 2012 net income rose 2 percent to 675 million liras ($374 million) yesterday.

Higher Dividends

Abu Dhabi’s ADX General Index rallied 1.7 percent to the highest level since October 2009 as investors bought banking stocks to take advantage of rising dividends. First Gulf Bank PJSC added 4.2 percent to the highest since July, 2008.

South Africa’s benchmark stock index slid 0.7 percent, falling for a second day, and the rand slipped 0.5 percent against the dollar. The government cut its economic growth forecast for 2013 to 2.7 percent from 3 percent.

ArcelorMittal South Africa Ltd. (ACL), the continent’s biggest steelmaker, and Impala Platinum Holdings Ltd. (IMP) lost at least 3.2 percent in Johannesburg.

Brazil’s Bovespa index was little changed in early trading.

India’s S&P BSE Sensex index climbed 0.7 percent, the most in a month, after Finance Ministry advisers said economic growth is set to recover. Volume was 23 percent above the 30-day average for the Sensex. India’s rupee advanced 0.4 percent.

Reports yesterday showed U.S. home sales surged 15.6 percent in January and the Conference Board’s consumer sentiment index climbed to 69.6, beating all estimates in a Bloomberg survey. Federal Reserve Chairman Ben S. Bernanke defended the central bank’s asset purchases, saying they are supporting the economy with little risk of inflation or bubbles in stocks and bonds.

Durable Goods

Data today will probably indicate orders for U.S. durable goods fell in January for the first time in five months, while pending sales of existing homes rose.

The emerging-markets index has fallen 1 percent this year, compared with a 3.6 percent gain in the MSCI World Index. The developing-nations index trades at 10.2 times projected 12-month earnings, compared with the MSCI World’s 13 times, data compiled by Bloomberg show.

The extra yield investors demand to hold emerging-market debt over U.S. Treasuries was unchanged at 291 basis points, according to the JPMorgan Chase & Co.’s EMBI Global Index.

The Shanghai Composite Index (SHCOMP) rose 0.9 percent from a one- month low, while the Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong climbed 0.4 percent. The Jakarta Composite Index added 1.1 percent, bound for a record close. South Korea’s won gained after the country’s current- account surplus widened.

Carmakers Gain

Guangzhou Automobile rose 6 percent after UBS upgraded the stock to neutral, citing an improving outlook for the industry.

Hyundai Motor advanced 0.7 percent. The company agreed to settle a group of lawsuits by U.S. customers who said they were misled into buying the South Korean carmaker’s vehicles because it overstated their fuel economy. Affiliate Kia Motors Corp. (000270) added 1.7 percent.

South Korea’s current-account surplus was $2.25 billion in January, compared with a revised surplus of $2.14 billion in December, Bank of Korea said in a statement in Seoul today. The nation’s consumer confidence remained at its highest level since May, data showed today. The won strengthened 0.3 percent against the dollar.

Chinese brokerages advanced, with Citic Securities Co. (600030) and Haitong Securities Co. rising at least 2.4 percent in Hong Kong. China may allow more firms to develop asset-backed securities businesses with the goal of boosting liquidity, the nation’s market regulator said. China plans to allow Hong Kong, Macau and Taiwan passport holders living on the mainland to invest in domestic Chinese shares, the China Securities Journal reported.

AirAsia Climbs

AirAsia Bhd. (AIRA) surged 8.3 percent, the most since August 2010. Net income more than doubled to 350.6 million ringgit ($113 million) in the three months ended December, according to an exchange filing yesterday. The airline also said it will begin paying 20 percent of annual net operating profits as dividends.

Sinopec Shanghai Petrochemical Co. jumped 11 percent in Hong Kong, the most since April 2009, after Bank of America Merrill Lynch upgraded the stock to buy.

Hyosung Corp. (004800) slumped 7.3 percent in Seoul, its steepest loss since September 2011, after its fourth-quarter profit missed analysts’ estimates. The stock was the worst performer on the MSCI Emerging Markets Index. (MXEF)

Beijing Capital International Airport Co. sank 4.4 percent in Hong Kong, after the stock was downgraded to neutral at Citigroup Inc.

To contact the reporters on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net; Maria Levitov in London at mlevitov@bloomberg.net

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


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