Emerging-market telecommunication stocks fell to a seven-week low after Telekomunikacja Polska SA cut dividends as North Korea’s nuclear test sent most developing-nation shares lower.
Telekomunikacja Polska plunged the most on record as the company cut its proposed dividend, leading Poland’s WIG 20 Index down. Gazprom slid for a seventh day, its longest losing streak since August 2011, after the company said last week it sees 2012 dividend payout falling as much as 22 percent. Korea Electric Power Corp. led the Kospi Index’s steepest retreat in a week as the North’s official news agency confirmed the underground atomic test.
Emerging-market telecommunication services companies lost 0.5 percent to 244.21 in New York, to lead a retreat on the MSCI Emerging Markets Index. The measure was little changed with 222 stocks dropping, 202 rising and 397 unchanged. The gauge has fallen 2.2 percent from a 17-month high reached on Jan. 3 as 61 percent of member companies that have reported quarterly profit missed estimates, twice the rate of the MSCI World Index of developed nations, according to data compiled by Bloomberg.
“One big thing that has been holding emerging markets back is earnings,” Alec Young, a New York-based global equity strategist at S&P Capital IQ, said by phone. “We don’t have the earnings momentum that we’re seeing in the developed world, and that’s weighing a little bit on the overall picture.”
The iShares MSCI exchange-traded fund tracking emerging-market shares rose 0.3 percent to $43.95. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, fell 6.1 percent to 16.62.
The MSCI Emerging Markets Index is trading 0.4 percent above its level at the start of this year. The gauge trades at 10.4 times estimated earnings, compared with the MSCI World’s valuation of 13.8, data compiled by Bloomberg show.
The Mexican IPC index fell 0.4 percent, as Corporacion GEO SAB plunged 5.9 percent on its fifth day of declines. Russia’s Micex Index slipped 0.3 percent and the ruble gained 0.4 percent after Bank Rossii kept interest rates on hold. The move was forecast by 21 of 22 economists in a Bloomberg survey.
Gazprom lost 1.4 percent in Moscow. The natural-gas exporter said last week it sees its dividend falling after weaker natural-gas sales in all markets reduced earnings. OAO Aeroflot, Russia’s biggest airline, declined 1 percent in Moscow after Vedomosti reported Russia’s federal aviation authority ordered the grounding of four of its Sukhoi Superjet-100s, citing unidentified officials.
OAO Novorossiysk Commercial Sea Port, Russia’s largest Black Sea port, surged 4.8 percent for the highest close since April 2011 in Moscow amid speculation the owners of the port’s operator are buying the stock.
Poland’s WIG20 fell 1.1 percent, the first drop in four days. Telekomunikacja Polska, Poland’s largest phone company, plunged 28 percent after cutting its proposed payout for a second time in four months as profit and revenue slid. The company led declines in the emerging-market index.
Hungary’s BUX Index added 0.2 percent. The country filed a prospectus with U.S. regulators for a dollar bond sale, ending an absence of almost two years from international issuance after Prime Minister Viktor Orban abandoned a quest for International Monetary Fund support.
The Czech Republic’s PX Index gained 0.3 percent, rising for a third day, the longest winning streak since Dec. 19. Telefonica Czech Republic AS fell 4.6 percent in Prague on bets the country’s largest phone company may follow Telekomunikacja Polska in cutting its dividend.
Turkey’s benchmark index jumped 1.1 percent as Turkiye Garanti Bankasi AS, the Turkish bank co-owned by BBVA SA, climbed 2.9 percent after Fitch Ratings said the nation’s adoption of anti-terrorism financing legislation last week reduces the risk of suspension from the OECD’s Financial Action Task Force. Arcelik AS dropped 2.3 percent to the lowest level in almost two months after reporting 2012 net income that missed estimates.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries slipped one basis point, or 0.01 percentage point, to 272 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
South Korea’s Kospi Index fell 0.3 percent, as the country’s national security adviser Chun Yung Woo said North Korea carried out a nuclear test at 11:57 a.m. local time today. The nation’s Cheil Worldwide Inc., Orion Corp. and Lotte Confectionery Co. Ltd. were among the biggest decliners in the MSCI Emerging Markets Index, losing at least 3.1 percent. Korea Electric Power slid 2.6 percent.
Markets in China, Taiwan, Malaysia and Vietnam are shut for Lunar New Year. Brazil’s market is closed for Carnival.
The BSE India Sensitive Index, or Sensex, climbed 0.5 percent, its first advance in nine days, as some investors judged the longest stretch of losses since Nov. 2011 as excessive. Unitech Ltd., charged with corruption over the allocation of Indian phone licenses in 2008, plunged 17.6 percent amid reports its chief executive discussed strategy with the prosecutor in the case.
The Jakarta Composite Index added 1 percent in Indonesia, where the central bank left its benchmark interest rate unchanged at a record low.
Indonesia’s “long-term prospects remain good,” Aldo Perkasa, who helps manage about $2 billion at PT Mandiri Manajemen Investasi, said by phone from Jakarta. North Korea’s nuclear test should not “lead to anything major. This has happened before in Korea. Should there be any impact, it would only be a short-term one,” he said.
PT Perusahaan Gas Negara surged 3.8 percent in Jakarta, the most in nine months, on speculation it may report foreign-exchange gains. A weaker yen is expected to result in a foreign-exchange gain for the company, Hariyanto Wijaya, an analyst at PT Mandiri Sekuritas, said.