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Emerging-Market Growth Rebounds From Four-Year Low: HSBC

Emerging-market economic growth recovered in August from the first contraction since 2009 as business conditions improved in China and Russia, HSBC Holdings Plc (HSBA) said, citing a survey of purchasing managers.

The HSBC Emerging Markets Index rose to 50.7 from 49.5 in July, when it contracted the first time since April 2009, HSBC said today in a report. It was the third-lowest reading in more than four years, the bank said. A value above 50 indicates expansion and below 50 signals contraction. The index is compiled by London-based Markit Economics and tracks conditions at more than 5,000 companies.

Investors sold riskier emerging-market assets after the U.S. Federal Reserve signaled it may begin to withdraw stimulus measures, threatening to derail a recovery. Output rebounded in China and Russia, two of the four largest emerging markets, the so-called BRIC economies, while it continued to drop in Brazil and India.

“Emerging market activity turned positive again in August, after losing traction in every month since April, and experiencing outright contraction in July,” Murat Ulgen, HSBC’s London-based chief economist for central and eastern Europe and sub-Saharan Africa, wrote in the report. “This was due to modest improvements in business conditions in China and Russia, helping to offset a steep deterioration in India and a marginal worsening in Brazil.”

The MSCI Emerging Markets Index has fallen 6.7 percent in the past three months, compared with a 1.4 percent gain for the S&P 500.

The HSBC Emerging Markets Future Output Index, which gauges company executives’ expectations for output in a year, rose for a second month to its highest since March, led by Brazil, HSBC said. Among the BRIC nations, the reading was the lowest for China.

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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