The MSCI Emerging Markets Index (MXEF) lost 0.2 percent to 1,064.41 at the close in New York, retreating from a more-than six-month high reached yesterday. Mexico’s IPC Index (IPC) slid the most in a month as Genomma Lab Internacional SAB (LABB) fell to a four- month low on concern it may increase debt to make an acquisition. Russia’s Micex Index (INDEXCF) dropped the most in two months, while Turkey’s benchmark gauge declined for the first time in five days.
European finance ministers approved a second bailout of 130 billion euros ($173 billion) in aid for Greece by tapping into European Central Bank profits and coaxing investors into providing more debt relief to shield the region from a default. The nation’s debt may still balloon to 160 percent of gross domestic product in a worst-case scenario, analysis by the International Monetary Fund and European officials indicates.
“Emerging markets are still focused on what’s happening in the euro zone,” Simon Quijano-Evans, an emerging-markets economist at ING Groep NV, said by phone from London. “The euro zone has confirmed that it will not let Greece default in the short term, but we obviously need to start seeing longer-term issues like a fiscal union being concretized.”
The MSCI Emerging Markets Index has gained 16 percent this year, while the MSCI World Index (MXWO) of developed-nation stocks advanced 9.5 percent. Emerging-market shares trade for 12 times reported earnings, and reached the most expensive level in eight months yesterday. Shares on the MSCI World are valued at 14.4 times earnings.
Iran Boosts Crude
Oil rose to the highest level in nine months in New York on speculation that the Greek deal will boost demand as increasing tensions between Iran and the West put pressure on supply. Oil futures for March delivery, which expired today, advanced 2.5 percent to $105.84 a barrel on the New York Mercantile Exchange, the highest settlement since May 4.
Mexico’s IPC Index (MEXBOL) lost 1.1 percent, the biggest drop since Jan. 13. Genomma Lab, a producer of over-the-counter drugs, made an offer to buy Prestige Brands Holdings Inc. (PBH) for $834 million today. The acquirer’s stock dropped 9.4 percent as investors worried the purchase will increase debt, said Aldo Miranda, a trader at Intercam Casa de Bolsa SA.
Brazilian and Argentinean markets were closed for holidays yesterday and today and will trade for half a day tomorrow. Indian and U.S. markets were shut yesterday.
South Africa’s FTSE/JSE Africa All Share Index (JALSH) gained 0.1 percent as higher metals prices boosted resources companies. Anglo American Plc (AAL) rose 1.3 percent in Johannesburg and BHP Billiton Ltd. (BIL), the world’s biggest mining company, added 0.7 percent.
The Shanghai Composite Index (SHCOMP) gained 0.8 percent, reversing losses of the same amount, on speculation the government will adopt more measures to ease a cash squeeze after cutting banks’ reserve-requirement ratios for the second time in two months over the weekend. Industrial & Commercial Bank of China Ltd., China’s largest lender, gained 1.4 percent and China Construction Bank Corp. (601939) added 0.6 percent as the People’s Bank of China’s move sent money-market rates lower.
Korean Air Lines Co. (003490), the nation’s biggest carrier, dropped 6.4 percent after Deutsche Bank AG recommended selling the stock. Asiana Airlines Inc. (020560) lost 4.4 percent on concern fuel prices will increase. The benchmark Kospi Index (KOSPI) was little changed.
The BSE India Sensitive Index (SENSEX), or Sensex, rose 0.8 percent to the highest level since July 27. Bharat Heavy Electricals Ltd. (BHEL), the country’s biggest producer of power equipment, advanced 4.8 percent to a three-month high after Power Secretary P. Uma Shankar said that the government will probably approve a proposal to levy a 19 percent import tax.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell nine basis points, or 0.09 percentage point, to 366 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.