Emerging Market Stocks Fluctuate on U.S. Economy, China Rates

Emerging-market stocks fluctuated as increasing confidence in the strength of the U.S. recovery was offset by concern that China’s tightening measures will slow growth in the world’s third-largest economy.

The MSCI Emerging Markets Index rose 0.1 percent to 1,127.19 at 10:51 a.m. New York time. Taiwan’s Taiex index rose 0.4 percent to the highest close since May 2008. The Philippine Stock Exchange Index gained 1.3 percent to a two-week high. Brazil’s Bovespa index fell for the second time this week. The Shanghai Composite Index, Asia’s worst-performing benchmark gauge this year, sank 0.8 percent.

China Vanke Co. fell 1.8 percent as a Chinese gauge of lending rates rose to the highest level in more than three years.

“Uncertainty over further controls is ruling the market,” said Deng Changrong, a strategist at Huaxi Securities Co. in Shenzhen. “As the market lacks liquidity at the moment, there’s no support for a strong rebound.”

The extra yield investors demand to hold emerging-market debt instead of Treasuries fell 5 basis points to 2.39 percentage points, JPMorgan Chase & Co.’s EMBI+ Index showed.

Hon Hai Precision, which gets about 36 percent of sales from America, rose to a two-month high in Taipei. Catcher Technology Co., a maker of notebook casings, advanced 6.7 percent.

A gauge tracking information technology stocks rose the most among the 10 industry groups on MSCI’s developing-nation measure.

Air Pact

In Kuala Lumpur, Malaysian Airline System Bhd., the national carrier, advanced 5.4 percent, gaining for a second day on the signing of an agreement with Air France-KLM Group’s Dutch KLM unit to foster closer cooperation.

Alliance Global Group Inc., owner of the Philippines’ largest casino and the local franchise of McDonald’s, surged 6.3 percent, the second-biggest gain on the MSCI Emerging Markets Index today. The company said it will buy 60 percent of Fil- Estate Land Inc. for 5 billion pesos ($113.4 million) to expand its tourism-related business. Fil-Estate rose 26 percent, its biggest gain since March 1.

China Vanke, the nation’s largest developer, retreated 1.8 percent. Cinda Real Estate Co. lost 1.7 percent.

China’s benchmark money-market rate surged to a three-year high as banks hoard cash before the New Year holiday. The seven- day repo rate jumped 150 basis points to 5.67 percent, according to a daily fixing published by the National Interbank Funding Center. Policy makers on Dec. 10 ordered lenders to park more money with the central bank for the third time in five weeks to limit inflation.

Brazil’s Vale SA, the world’s biggest iron-ore producer, retreated as metals prices slid for the first time in five days. PDG Realty SA Empreendimentos & Participacoes led a decline in homebuilders after the central bank yesterday signaled it may raise interest rates next year.

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net

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

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