Emerging-Market Stocks Rise as Tata Motors Leads Rally in India

Emerging-market stocks posted the biggest two-day gain since March as technology shares rose and Tata Motors Ltd.’s (TTMT) earnings pushed up Indian equities. Oil company Petroleo Brasileiro SA led Brazil’s Ibovespa lower.

Tata Motors surged the most since September after net income grew threefold, sending the S&P BSE Sensex (SENSEX) to its steepest increase in two months. Catcher Technology Co. (2474) jumped 5.4 percent in Taipei after its operating profit exceeded analysts estimates. The Micex Index advanced less than 0.1 percent in its third straight gain in Moscow. Turkey’s lira fell the most among developing-nation currencies as German investor confidence fell to the lowest level since 2012.

The MSCI Emerging Markets Index added 0.3 percent to 1,064.42, pushing its two-day gain to 1.8 percent. The measure ended a four-day loss yesterday as tension eased in Ukraine and after a selloff in Russian stocks sent the Micex index (INDEXCF)’s valuations to a three-month low. The emerging technology gauge, the best performer among 10 industry groups this year, rose for a second day.

Developing countries have performed “marginally better, with hope of mild easing of geopolitical issues, and a handful of good results like Tata Motors,” Nick Paulson-Ellis, co-head of global emerging markets at Espirito Santo Investment Bank in London, said by e-mail. Russian stocks are seeing “a relief rally” as “investors are still trying to grapple with the impact of sanctions,” he said.

Stock Valuations

The developing-nation gauge has risen 6.2 percent this year and trades at 11.1 times 12-month projected earnings, data compiled by Bloomberg show. The MSCI World Index has gained 2.3 percent and is valued at a multiple of 14.7.

Catcher, a supplier of casings to Apple Inc., surged the most since April 28. The company reported second-quarter operating profit of NT$5.16 billion ($172 million), beating the NT$3.9 billion estimate of 15 analysts in a Bloomberg survey.

Tencent Holdings Ltd. (700), Asia’s biggest Internet company, rose 0.8 percent in Hong Kong before its earnings tomorrow.

Russia’s ruble depreciated 0.6 percent versus the dollar as the nation canceled its fourth ruble bond auction in a row after benchmark yields rose to a record on concern retaliatory sanctions will tip the nation into recession.

The country’s stock index added as much as 1 percent and lost as much as 0.3 percent before closing less than 0.1 percent higher. Ukraine warned a humanitarian aid mission from Moscow may be a guise to bring military gear into the country.

Indian Stocks

Speculation that President Vladimir Putin was seeking to ease the conflict with Ukraine helped spur buying in the last two trading days since the Micex’s price-to-earnings ratio fell to 4.81 times 12-month projected earnings on Aug. 8, according to data compiled by Bloomberg.

Tata Motors, India’s biggest automaker, jumped 6.2 percent in Mumbai after it posted profit that beat estimates. The benchmark Sensex rose 1.4 percent.

The Ibovespa declined 0.3 percent in Sao Paulo. Petroleo Brasileiro, the Brazilian state-run oil producer, led the decline, tumbling 2.3 percent.

Eight of 10 industry groups in the emerging-market index climbed today, led by consumer discretionary and industrial companies. The premium investors demand to own developing-country debt over U.S. Treasuries narrowed by three basis points to 289, JPMorgan Chase & Co. indexes show.

Turkish stocks rose 0.7 percent following a drop to a five-week low yesterday after Fitch Ratings said the election of Prime Minister Recep Tayyip Erdogan as president will do little to improve the country’s credit profile. The lira depreciated 0.6 percent against the dollar today.

The ZEW Center for European Economic Research in Mannheim, German said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, dropped to 8.6 in August from 27.1 in July.

Poland, Hungary

The WIG30 Index decreased 0.1 percent in Warsaw. Hungary’s BUX Index retreated 1.1 percent, led by OTP Bank Nyrt. The lender sees losses of as much as 219 billion forint ($932 million) from refunds related to exchange rate margins and unilateral interest rate increases on household loans, exceeding previous estimates, according to a statement to the Budapest bourse.

The Shanghai Composite slipped for the first time in three days as Huaxia Bank Co. (600015) and Industrial Bank Co. (1398) dropped at least 1 percent. China may release economic data on new yuan loans and money supply as early as today. The government is scheduled to unveil July data on industrial production, fixed-asset investment and retail sales tomorrow.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 0.2 percent.

To contact the reporters on this story: Sharon Cho in Seoul at ccho28@bloomberg.net; Priyanka Sharma in London at psharma142@bloomberg.net

To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net Zahra Hankir, Richard Richtmyer

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