Most Emerging Stocks Decline as Samsung, Embraer Sink

Most emerging-market stocks fell as Samsung Electronics Co.’s earnings missed estimates and planemaker Embraer SA (EMBR3) posted a surprise loss. Turkish stocks capped the biggest weekly loss since June after policy makers raised borrowing costs.

Samsung, the world’s biggest smartphone maker, retreated for the first time in a week in Seoul. Embraer, the world’s largest regional-jet maker, fell the most in more than a year in Sao Paulo. Akbank TAS, the Turkish lender part-owned by Citigroup Inc., dropped to a two-week low after profit trailed projections. Homebuilder Desarrolladora Homex SAB sank 30 percent in Mexico City after posting a record quarterly loss.

The MSCI Emerging Markets Index fell 0.1 percent to 961.53, with 433 of its member stocks falling. The decline pared the gauge’s five-day gain to 1.2 percent, a third weekly advance. About 55 percent of companies in the index that posted quarterly earnings this month trailed estimates. The Federal Open Market Committee will hold a meeting next week, and a July 31 report may show U.S. economic growth slowed in the April-to-June period.

Emerging markets have some pretty meaningful headwinds against them right now,” James W. Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.6 billion in assets, said by phone. “The story is starting to look a bit more interesting, but we don’t yet see the catalyst. They’re going through a difficult period, and that is going to flow through to the companies.”

Brazilian Steelmakers

Benchmark gauges in China, Turkey, Poland, Hungary and the Philippines fell at least 0.5 percent. Indexes in Thailand and the Czech Republic gained more than 0.6 percent.

The iShares MSCI Emerging Markets Index exchange-traded fund lost 0.2 percent to $39.83. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, fell 1 percent to 21.30.

Brazil’s Ibovespa (IBOV) capped its best weekly gain in 10 months as Usinas Siderurgicas de Minas Gerais SA jumped 15 percent, leading a rally in steelmakers after its second-quarter earnings beat estimates.

Embraer posted a net loss of 9.9 million reais ($4.4 million) in the second quarter, surprising analysts who on average had forecast a profit of 217 million reais. The stock slumped 5.7 percent.

The Mexican IPC Index rose 0.8 percent. Homex, the country’s biggest homebuilder by 2012 revenue, plunged the most on record after posting its biggest-ever loss of 10.1 billion peso ($797 million) as sales and property values tumbled.

Turkey Rates

Akbank sank 4.2 percent in Istanbul, falling for a sixth straight day, the longest streak in almost two months. Turcas Petrol AS (TRCAS) lost 1.6 percent after the Turkish energy company said Finance Ministry officials started an inspection at its venture with Royal Dutch Shell Plc.

Turkey’s central bank increased its overnight lending rate by 0.75 percentage point to 7.25 percent on July 23 and said “additional monetary tightening will be implemented when necessary.” The country’s benchmark equity index fell 4.4 percent this week.

PKN Orlen SA and Grupa Lotos SA, Poland’s largest oil companies, sank more than 4.4 percent. PKN tumbled 12 percent this week after reporting its loss widened in the second quarter. KGHM Polska Miedz SA, the country’s sole copper producer, lost 2.5 percent. Mol Nyrt., Hungary’s biggest refiner, slipped 0.5 percent.

Oil, Copper

Oil dropped 0.7 percent in New York, capping its first weekly decline in more than a month. Copper also slid in New York.

Telefonica Czech Republic AS jumped 4 percent to a five-week high after Russian billionaire Vladimir Evtushenkov said he’s studying takeover targets including the Spanish phone company’s Czech unit. Evtushenkov, owner of Russia’s largest wireless operator OAO Mobile TeleSystems, said in an interview he is considering targets in various markets though he currently doesn’t have any concrete proposals pending. MTS gained 0.6 percent in Moscow.

OAO Uralkali, the world’s largest potash producer by output, rose 1.6 percent in Moscow, rebounding from its lowest level since December 2010. Russia’s Micex Index snapped two days of declines as it climbed 0.1 percent.

The MSCI Emerging-Markets Index has lost 8.9 percent this year, while the MSCI World Index of developed-country stocks has gained 13 percent. The emerging-stocks measure trades at 10.1 times 12-month projected earnings, compared with the MSCI world’s multiple of 13.8, data compiled by Bloomberg show.

Samsung Earnings

Samsung (005930) dropped 0.9 percent, the biggest drag to the MSCI developing-nation gauge, after its second-quarter earnings trailed estimates as market saturation for high-end handsets curbed sales growth for its flagship Galaxy S4.

The won increased 0.4 percent against the dollar, extending its third week of gains after Bank of Korea Governor Kim Choong Soo said the economy is overcoming the impact of a weak yen. The Indian rupee strengthened for a third day, adding 0.1 percent, bringing this week’s gain to 0.5 percent. The currency rallied after the central bank tightened the supply of cash to arrest the rupee’s slide.

The Shanghai Composite Index (SHCOMP) slipped 0.5 percent after China’s government ordered cuts to production capacity in 19 industries.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage point, to 315 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.

To contact Bloomberg News staff for this story: Lyubov Pronina in London at lpronina@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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