Emerging Stocks Snap Two-Day Retreat Before U.S. Data

Emerging-market stocks rose for the first time in three days as better-than-estimated data from the U.S., India and Europe boosted confidence in the global economy.

The MSCI Emerging Markets Index (MXEF) advanced 0.5 percent to 977.25. Samsung Electronics Co. (005930), South Korea’s biggest exporter of consumer electronics, climbed 1.5 percent after Standard & Poor’s raised its credit outlook. ICICI Bank Ltd. advanced 2.2 percent in Mumbai, the most in two weeks. Brazil’s Bovespa stock index (VXEEM) slumped the most in two weeks. Gol Linhas Aereas Inteligentes SA (GOLL4), Brazil’s second-biggest airline by market share, led the declines.

U.S. retail sales rose 0.8 percent, topping the 0.3 percent estimate in a Bloomberg survey. India’s inflation fell to a 32- month low, spurring speculation among some investors that the central bank may cut interest rates. German growth slowed less than economists forecast in the second quarter, while France’s economy unexpectedly avoided a contraction.

“We have had a couple of data points which have not disappointed expectation and that’s helped boost the mood a little bit,” Nick Chamie , global head of foreign-exchange strategy and head of emerging-markets research at Royal Bank of Canada, said by phone from Toronto. “Sentiment has been beaten up sufficiently over the last year that investor hopes of eventually finding a bottom in the data remain strong.”

EM ETF Gains

The iShares MSCI Emerging Markets Index (EGX30) exchange-traded fund, the ETF (EEM) tracking developing-nation shares, was little changed at 40.36. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose for the first time in six days, increasing 1.4 percent to 22.54.

The Bovespa index dropped 1.8 percent, the most since July 31. Gol dropped the most since July 2011 after second-quarter net loss almost doubled. Brazilian homebuilder Gafisa SA decline 7.9 percent, the most since May 22.

The 0.8 percent rise in U.S. retail sales, the first gain in four months, followed a 0.7 percent decrease in June that was weaker than first reported, Commerce Department figures showed today in Washington. Economists projected a 0.3 percent gain, according to the median forecast in a Bloomberg survey. Sales excluding automobiles also climbed 0.8 percent.

China, South Korea

The Hang Seng China Enterprises Index (HSCEI) increased 1 percent, the most in a week, while South Korea’s Kospi climbed 1.3 percent to a three-month high. The BSE India Sensitive Index rose 0.5 percent, rebounding from earlier losses after the inflation report. Russia’s Micex Index increased 0.7 percent as oil climbed for the first time in three days in New York. OAO Gazprom added 1 percent.

Egypt’s EGX 30 Index jumped 1.3 percent after the military council signaled it won’t oppose President Mohamed Mursi’s decision to retire the nation’s two top generals.

The MSCI emerging-markets gauge trades at 10.8 times estimated earnings, compared with 12.9 for the MSCI World Index of developed-nation shares, data compiled by Bloomberg show.

Germany’s gross domestic product rose 0.3 percent from the first quarter, when it increased 0.5 percent, the Federal Statistics Office said today. Economists predicted a 0.2 percent gain, according to the median of 40 estimates in a Bloomberg News survey. French GDP was unchanged in the quarter, better than the 0.1 percent decline economists had predicted.

Samsung Electronics

The 21 nations in the MSCI gauge send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show.

Samsung Electronics advanced after S&P raised its outlook to positive from stable, saying the company will continue to improve its operating performance. Hyundai Motor Co. (005380), South Korea’s biggest carmaker, rallied 1.6 percent, while LG Display Co., the world’s second-largest maker of liquid-crystal displays, gained 2.1 percent, leading exporters higher.

Citic Securities Co. (600030), China’s biggest listed brokerage, dropped to a six-month low in Shanghai, as the Securities Times reported the company had denied speculation of “huge” losses on overseas investments. The shares lost 1.6 percent, following a 9.1 percent retreat yesterday.

The extra yield investors demand to own emerging-market bonds over U.S. Treasuries fell seven basis points, or 0.07 percentage point, to 316, according to JPMorgan Chase & Co.’s EMBI Global Index. (SENSEX)

To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story: Tal Barak Harif at tbarak@bloomberg.net; Darren Boey at dboey@bloomberg.net

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