Emerging Stocks Snap Five-Day Rally on China Trade Data

Emerging-market stocks posted their biggest weekly advance since February on speculation central banks from China to the U.S. will take steps to stimulate their economies.

The MSCI Emerging Markets Index stood at 979.25 at 5 p.m. in New York to hold its gain for the week at 2.8 percent, the biggest increase since the period ended Feb. 3. Brazil’s Bovespa (IBOV) index rose as homebuilder Gafisa SA (GFSA3) jumped the most in nine weeks and clothing retailer Lojas Renner SA (LREN3) advanced. Tencent Holdings Ltd. (700), China’s largest Internet company, slumped the most in four weeks in Hong Kong after its online games partner cut its sales forecast.

China’s exports rose 1 percent in July, trailing the 8 percent median estimate in a Bloomberg News survey. Data showing weaker lending added to signs that policy makers in the second-biggest economy may struggle to boost growth from the slowest pace since 2009. The International Energy Agency cut global oil demand forecasts for this year and next.

“The Chinese data figure points to very poor international demand, so this had a negative impact on the whole market,” Daniel Lenz, chief strategist for emerging markets at DZ Bank AG in Frankfurt, said by phone. “This data feeds expectations of further easing measures.”

The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, added 0.5 percent while the Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, declined 2.7 percent.

Oil Declines

The Bovespa gained 0.8 percent as Gafisa, the worst-performing Brazilian homebuilder in the past 12 months, surged 15 percent after reporting a surprise profit in the second quarter following two consecutive losses. Lojas Renner added 3.9 percent, rising to a four-month high,

Crude for September delivery fell 0.5 percent on the New York Mercantile Exchange to settle at $92.87. The decline trimmed a weekly advance to 1.6 percent. It was the fourth gain in five weeks.

Polish bond yields increased to the highest level in more than two weeks on concern rising food prices will fuel inflation.

The extra yield investors demand to own emerging-market dollar bonds over U.S. Treasuries increased five basis points, or 0.05 percentage point, to 322, according to the JPMorgan Chase & Co. EMBI Global Index.

Fund Flows

The MSCI emerging markets index has advanced 6.9 percent this year, trailing an 8.1 percent gain by the MSCI World Index of developed countries. The emerging markets measure trades at 10.8 times estimated earnings, compared with 13 for the advanced-nations gauge, data compiled by Bloomberg show.

Emerging-market stock funds posted inflows for the week ended Aug. 8, taking in $784.4 million, according to EPFR Global. Developing-nation debt funds had inflows for a ninth straight week, luring $720 million.

China’s 1 percent growth in July exports compared with 11.3 percent in June. New local-currency lending was 540.1 billion yuan ($85 billion), the central bank said, lower than all 30 estimates in a Bloomberg News survey, after 919.8 billion yuan in June. Today’s figures followed a report yesterday showing industrial output rose the least since 2009.

Tencent fell 2.8 percent after its partner Nexon Co. cut its forecast for full-year net income by 13 percent yesterday. The guidance prompted Nomura Holdings Inc. to lower its estimates for Tokyo-based Nexon’s revenue in 2013 and 2014.

To contact the reporters on this story: Ian Sayson in Manila at isayson@bloomberg.net, or Leon Lazaroff in New York at llazaroff@bloomberg.net

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

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