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Emerging Stocks Climb as China Trade Data Boosts Shippers

January 10, 2013

Emerging-market stocks climbed the most in a week, boosted by companies tied to economic growth, as better-than-estimated Chinese trade figures added to signs the Asian nation is emerging from its slowdown.

China Southern Airlines Co. (1055) and China Cosco Holdings Co. (1919), climbed at least 7 percent in Hong Kong, leading gains among airlines, shipping companies and raw-material producers. Vietnamese stocks entered a bull market as the prime minister reiterated that the central bank must pursue policies this year that boost growth. Cia. Hering, Brazil’s third-biggest apparel retailer, slumped the most since June 2009 on weaker sales. The MSCI EM Eastern Europe Index climbed to a four-month high.

The MSCI Emerging Markets Index (MXEF) rose 0.4 percent to 1076.99 in New York, the steepest advance since Jan. 3. China’s exports increased 14.1 percent in December from a year earlier, while imports added 6 percent, the customs office said today. The European Central Bank kept its benchmark interest rate on hold as its president, Mario Draghi, said a gradual recovery in the euro-area economy should start later this year.

“That’s some good news on the European economic growth front and will attract investors to look into eastern European emerging markets,” Esther Law, the director of emerging-market strategy at Societe Generale SA in London, said in a phone interview today. “The China exports number is also quite encouraging and external demand is recovering. This is a genuinely good number.”

‘Great Rotation’

The iShares MSCI Emerging Markets Index (EEM:US) exchange-traded fund, the ETF tracking developing-nation shares, gained 0.9 percent to 44.83. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, dropped for a third day, falling 2.1 percent.

China will have a bigger influence than the U.S. or Europe over the economies of developing nations as the world’s biggest exporter increases its contribution to global growth, according to HSBC Holdings Plc. (HSBA) The trade data burnishes the outlook for the world’s biggest exporter, which has already seen gains in retail sales and manufacturing over the past two months.

“We are moving away from a U.S.- or Europe-led world to a world led by China,” Stephen King, HSBC’s chief economist, wrote in an Emerging Markets Index report published today. “China will make its biggest-ever contribution to global growth in 2014,” King said, in what he termed a “great rotation.”

U.S. jobless claims unexpectedly rose last week, Labor Department figures showed today, a sign that improvement in the labor market remains uneven. Initial jobless claims reflect weekly firings and tend to fall as job growth accelerates.

Vietnam Bull

The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong added 1 percent, while the Shanghai Composite Index rose 0.4 percent. South Korea’s Kospi index jumped 0.8 percent and Taiwan’s Taiex added 0.9 percent. Equity volumes were higher than average in China, Taiwan and South Korea, with trading on the Shanghai gauge 20 percent above the 30-day average and 44 percent higher on Taiwan’s Taiex Index.

Vietnam’s benchmark VN Index surged 23 percent from a closing low on Nov. 2. An advance of 20 percent or more from a low signals a bull market to some investors. Prime Minister Nguyen Tan Dung ordered the central bank to pursue monetary policies in 2013 that balance curbing inflation with increased commercial lending and economic growth, maintain the value of the dong and resolve bad debts at lenders, according to a statement on the central bank’s website today.

The MSCI EM Eastern Europe (MXME) increased 0.3 percent to 210.83, the highest close sine Sept. 17. Hungary’s BUX Index added 0.2 percent, the highest close since Nov. 14, while Poland’s WIG20 Index rose 0.2 percent, gaining for a second day.

Rate Cut

The Nairobi Securities Exchange Ltd 20 Share Index (KNSMIDX) increased 0.3 percent to the highest level since February 2011. Kenya’s central bank lowered its key lending rate to 9.5 percent from 11 percent, the fourth cut since July, as policy makers try to sustain an economic rebound with cheaper credit.

The Bovespa Index added 0.2 percent in Sao Paulo. Hering, the Brazilian chain known for affordable jeans and T-shirts, fell 12 percent to lead declines on the emerging-markets gauge, as sales retreated in the fourth quarter.

Preferred shares of AES Tiete SA (GETI3) jumped 3.7 percent to lead gains by power utilities after Energy Minister Edison Lobao said rates may rise if a lack of rain reduces output at hydropower dams and forces the use of natural-gas plants to meet demand.

Technology Stocks

A gauge of technology stocks in the MSCI Emerging Markets Index snapped a five-day slide, climbing 1.1 percent. The broader index has risen 2.1 percent this year, trailing a 3 percent gain by the MSCI World Index (MXWO) of developed-country stocks. The developing-nations measure trades at 11 times estimated earnings, compared with the MSCI World’s multiple of 13.3, data compiled by Bloomberg show.

China Southern rose 7.8 percent to lead gains on the index, while China Cosco jumped 7.3 percent in Hong Kong to the highest level since April 19.

Growth in China’s overseas shipments beat the 5 percent median estimate of 40 analysts in a Bloomberg survey. Exports rose 2.9 percent in November on an annual basis. Asia’s biggest economy probably expanded 7.8 percent in the fourth quarter, the median of 33 estimates showed, from 7.4 percent in the three months to Sept. 30. Gross domestic product data is scheduled to be released next week.

Gas Companies

Korea Gas Corp. (036460), the world’s largest buyer of liquefied natural gas, advanced 5.2 percent, the biggest gain since Nov. 1. Russia’s Micex Index fell 0.6 percent, snapping two days of gains.

Dana Gas PJSC (DANA) added 4.1 percent in Abu Dhabi, the highest close since March 5, on bets the United Arab Emirates fuel producer will collect outstanding payments in Iraq and Egypt, boosting its earnings outlook.

India’s Oil and Natural Gas Corp. rose 3.4 percent in Mumbai, its seventh day of gains, in the longest winning streak since December 2010. The stock reached the highest price since May 2011 amid expectations the government may raise diesel and cooking gas prices, reducing the state-run explorer’s subsidy obligations.

Eurocash SA (EUR), Poland’s biggest distributor of non-durable consumer goods, jumped 3.8 percent to close at the highest level since its 2005 debut on the bourse in Warsaw, after JPMorgan Chase & Co. started coverage on the stock with an overweight recommendation.

OAO Magnit, Russia’s biggest retailer, rose 1.7 percent in London trading, gaining for the first time in four days. The company’s net retail sales rose 34 percent last year, it said in a statement today.

Currencies Strengthen

Twelve-month yuan forwards strengthened 0.4 percent to 6.2685 per dollar in Hong Kong, the biggest gain since Jan. 18, 2012. The yuan traded 0.03 percent higher at 6.2245 per dollar in Shanghai, near a 19-year high of 6.2216 reached yesterday.

The Romanian leu led gains in emerging market currencies, strengthening 0.6 percent to an nine-month high against the euro. The Finance Ministry will sell 600 million lei ($179 million) in four-year bonds at an auction today. The Czech koruna weakened against the euro after Governor Miroslav Singer said the central bank may sell the currency this year to help stem the country’s recession. The Russian ruble appreciated 0.6 percent against the dollar.

Malaysia’s ringgit gained against the dollar for a fourth day, its longest winning streak since November, after data showed factory output increased by more than forecast in November. Indonesia’s rupiah dropped to the weakest level since September 2009. The nation’s central bank kept its benchmark interest rate unchanged for an 11th straight meeting as a slide in the currency threatens to stoke price pressures.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell five basis points, or 0.05 percentage point, to 258, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Ian Sayson in Manila at; Victoria Stilwell in New York at

To contact the editor responsible for this story: Emma O’Brien at

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