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Emerging Stocks Fall From Seven-Month High on China, Fed Outlook

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March 1 (Bloomberg) -- Emerging-market stocks fell from a seven-month high on speculation the U.S. and China will refrain from further steps to ease monetary policy as their economies improve, curbing demand for emerging-market assets.

The MSCI Emerging Markets Index declined 0.3 percent to 1,076.42 as of the close in New York, snapping a two-day, 2.2 percent gain that took it to its strongest level since Aug. 3. Shimao Property Holdings Ltd. tumbled 10 percent, pacing a drop among financial companies on the MSCI index, after a report showed Chinese home prices fell the most in 19 months. Brazil’s Bovespa Index gained 1.5 percent, led by JBS SA, the world’s largest beef producer.

China’s manufacturing improved for a third straight month in February, signaling the world’s second-biggest economy is weathering the euro area’s debt crisis. The number of first-time claims for U.S. jobless benefits fell to a level matching a four-year low, evidence the labor market is healing after Federal Reserve Chairman Ben S. Bernanke failed to signal further monetary easing in testimony to the Congress yesterday.

“It does seem unlikely that there’d be a need for massive quantitative easing,” Greg Lesko, who manages $700 million at Deltec Asset Management in New York, said by phone. “The flip side of that is that if the growth is good, then we shouldn’t need easing.”

The MSCI Emerging Markets Index has climbed 17 percent this year, while the MSCI World gauge gained 10 percent. The measure of developing nations is valued at 10.8 times estimated profit, compared with the 13 ratio for developed-country stocks on the MSCI World index.

Purchasing Data

China’s purchasing managers’ index rose to 51.0 from 50.5 in January, China’s statistics bureau and logistics federation said today. That’s the highest level since September. Economic data in the first two months are distorted by the Chinese New Year holiday.

“As the U.S. economy continues to recover and with China’s manufacturing still expanding, there’s less likelihood of further monetary easing,” said Castor Pang, head of research at Core-Pacific Yamaichi International Ltd in Hong Kong.

Russia’s 30-stock Micex Index rose less than 0.1 percent, holding at the highest since Aug. 4. OAO Novolipetsk Steel, Russia’s largest maker of the metal by market value, gained 2.4 percent.

Brazil’s Bovespa Index rebounded from yesterday’s decline with a 1.5 percent rally, led by a 10 percent jump in JBS. Pilgrim’s Pride Corp., the U.S. poultry producer controlled by JBS, raised $200 million in a rights offering, strengthening its finances.

China Home Prices

China’s February home prices posted the biggest decline in 19 months, according to SouFun Holdings Ltd., the nation’s largest real-estate website owner. China Overseas Land & Investment Ltd., the biggest mainland developer listed in Hong Kong, dropped 5.5 percent.

The Hang Seng China Enterprises Index of mainland companies in Hong Kong retreated 1.9 percent, the most since Feb. 10.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries declined nine basis points, or 0.09 percentage point, to 348, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

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

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