Emerging Stocks Rise to Best Week Since September After Payrolls

Emerging-market stocks rose, adding to the benchmark index’s biggest weekly gain in almost two months, as industrial and technology companies’ profits beat estimates and hiring in the U.S. increased more than forecast.

Samsung Heavy Industries Co., the world’s second-largest shipbuilder, rallied the most in eight months and Wipro Ltd., India’s third-largest software-services exporter, rose for a fifth day after earnings topped analysts’ forecasts. OAO Gazprom, the world’s biggest natural gas producer, snapped a five-day decline after quarterly earnings exceeded estimates.

The MSCI Emerging Markets Index advanced 0.5 percent to 1,004.68 at the close of trading in New York. The gauge climbed 1.4 percent this week, the most since the period ended Sept. 14. Its 30-day historical volatility, a measure of price swings, fell to a six-year low of 8.9 yesterday after data on U.S. manufacturing and employment topped forecasts. A net 171,000 workers were added to payrolls after a 148,000 gain in September, Labor Department figures showed today in Washington.

“The job creation was stronger than we anticipated, and that’s certainly a positive sign for the U.S. economy,” Nick Chamie, global head of foreign-exchange strategy and emerging markets research at Royal Bank of Canada, said in a phone interview from Toronto. “The data is consistent with a mild basing out of the growth slowdown, and with relatively weak growth moving forward. The market is pricing out a little bit of the more dire scenarios.”

The median forecast on U.S. payrolls from 91 economists surveyed by Bloomberg called for an advance of 125,000. The jobless rate rose to 7.9 percent from 7.8 percent as more people entered the labor force.

Share Premiums

The 21 countries in the MSCI emerging stocks index send about 13 percent of exports to the U.S. on average, according to data from the World Trade Organization.

Quarterly profits at MSCI index companies trailed analysts’ projections by 7.2 percent since the end of September, while sales beat forecasts by 2.3 percent.

The Institute for Supply Management’s U.S. factory index rose to a five-month high of 51.7 in October, from 51.5 the previous month, the Tempe, Arizona, group reported yesterday. The Conference Board’s consumer sentiment index increased to 72.2, the highest since February 2008. Fewer Americans filed claims for unemployment benefits, pointing to resilience in the economy heading into the fourth quarter. A purchasing managers’ index indicated manufacturing in China grew in October for the first time in three months.

China’s Purchasing Managers’ Index was 50.2 in October, according to official data released yesterday, signaling the first manufacturing expansion in three months.

China, South Korea

The Hang Seng China Enterprises Index of mainland companies added 1.2 percent, up 20 percent from a Sept. 5 low, marking the start of a bull market and outpacing the Shanghai Composite Index. The Hang Seng China AH Premium index, which tracks the price of Chinese companies traded on the mainland relative to their Hong Kong-listed counterparts, fell to the lowest level since June 2011.

South Korea’s Kospi index rose 1.1 percent, while the BSE India Sensitive Index added 1 percent. Russia’s Micex Index climbed 0.7 percent for a third day of gains. Czech and South African shares advanced while Turkey’s ISE National 100 Index fell. Hungary’s stock market was closed for a second day for public holidays. Markets in Brazil and Mexico were also closed for local holidays. Colombia’s IGBC index slumped 1 percent.

Volume Increase

Vietnam’s VN Index sank 3.3 percent, the most in Asia, closing at the lowest level since Jan. 20. China’s yuan weakened as the central bank lowered the reference rate for a second day to a level that meant the currency had to drop to stay within the trading band. Russia’s ruble weakened for the first time in four days, falling 0.6 percent versus the dollar.

The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, fell 0.5 percent. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, dropped 0.8 percent.

Equity trading volumes were higher than average in Malaysia and Taiwan today, and fell in South Korea and Russia. About 20 percent more shares of FTSE Bursa Malaysia KLCI Index companies changed hands versus the 30-day average, according to data compiled by Bloomberg. Volumes were 12 percent higher in the Taiex Index, while they fell 20 percent in the Kospi. Micex volumes were 38 percent lower.

Equity Inflows

Global equity funds lured net inflows for the first time in five weeks in the seven days through Oct. 31, according to a weekly Citigroup Inc. report today, as signs the world economy is improving boosted appetite for riskier assets. Developed-nation funds drew about $1.9 billion, while emerging-market funds took about $900 million, with China posting the highest weekly inflow at $601 million, the brokerage said in a report today, citing data compiled by EPFR Global.

Gauges of technology and industrial stocks led gains among 10 industry groups in the MSCI Emerging Markets Index, rising by 1 percent each. The broader index has climbed 9.6 percent this year, trailing a 10 percent increase in the MSCI World Index of developed countries. The developing-markets gauge trades at 11.5 times estimated profit, compared with the MSCI World’s 13.3 times, data compiled by Bloomberg show.

Samsung Heavy rose 6.1 percent in Seoul, leading industrial stocks higher, after reporting third-quarter net income of 277.4 billion won ($254 million). That exceeded the 180.6 billion-won average of 23 analyst estimates compiled by Bloomberg. Woori Finance Holdings Co. added 3.9 percent, snapping a three-day drop, after an unexpected rise in third-quarter profit.

Gazprom, Wipro

Russia’s Gazprom added 1.2 percent. The world’s biggest natural gas producer said net income declined to 150.8 billion rubles ($4.8 billion) from 303.7 billion rubles a year earlier, beating the average 140.3 billion-ruble estimate of nine analysts surveyed by Bloomberg.

India’s Wipro climbed 0.9 percent, extending a weekly jump to 8.5 percent, after saying net income rose 24 percent to 16.1 billion rupees ($299 million) in the second quarter ended September, exceeding the 15.5 billion-rupee median of 42 analysts’ estimates compiled by Bloomberg.

Hengdeli Holdings Ltd., the Chinese retail partner of Swatch Group AG, surged 9.6 percent in Hong Kong after data showed the city’s September retail sales increased 9.4 percent by value from the previous year, beating estimates. Inotera Memories Inc., which makes dynamic random access memory chips, tumbled 6.7 percent to a record low in Taipei after the Taiwan Stock Exchange announced trading restrictions. The stock was the second worst-performer on the MSCI Emerging Markets Index.

Colombia’s stock exchange suspended trading in Interbolsa SA for five working days, according to a statement on its website, after financial regulators announced they will take over the company’s brokerage unit. Interbolsa tumbled 30 percent yesterday, the most on record.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell two basis points, or 0.02 percentage points, to 291, according to JPMorgan Chase & Co.’s EMBI Global Index.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE