Emerging Stocks Snap Two-Day Slump on Europe, Chinese Policy Speculation
Emerging-market stocks rose for the first time in three days as speculation European leaders will resolve the region’s debt crisis and China will loosen its monetary policies bolstered the outlook for the global economy.
The MSCI Emerging Markets Index (MXEF) gained 0.6 percent to 939.47 at 12:59 p.m. Singapore time, snapping a two-day, 2.6 percent drop. The Hang Seng China Enterprises Index (HSCEI) jumped 1.9 percent in Hong Kong, while Korea’s Kospi index (KOSPI) and Taiwan’s Taiex index (TWSE) increased at least 0.6 percent. The Shanghai Composite Index (SHCOMP) lost 0.5 percent.
German Finance Minister Wolfgang Schaeuble said yesterday euro-area policy makers will now focus on implementing a Dec. 9 accord that provides tighter budget rules and boosts their crisis-fighting war chest by as much as 200 billion euros ($267 billion). Chinese data showing a smaller trade surplus and the weakest export growth since 2009 may encourage Chinese policy makers to add to a Nov. 30 cut in bank reserve requirements.
“There are some increasing prospects of resolution in Europe,” Nigel Tupper, Asia Pacific strategist at Bank of America Corp.’s Merrill Lynch unit, said in a Bloomberg Television in Hong Kong. “The Chinese trade surplus numbers are weaker. That’s just indicative of the global economy slowing down. But on the other side, that allows governments to respond with policy.”
Speculation mounted that China will ease monetary policies after customs data on Dec. 10 showed overseas shipments rose 13.8 percent in November from a year earlier. Excluding distortions in January and February each year, that was the least since export growth resumed in December 2009. The excess of exports over imports fell by 35 percent, the data showed.
China Easing Outlook
“China’s capital outflows will continue and the trade surplus may shrink further, forcing the central bank to cut reserve ratios” and use bill sales to inject liquidity and bolster growth, said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd.
A gauge of technology shares in the MSCI Emerging Markets Index rose 1.4 percent, the most among 10 industry groups. Samsung Electronics Co. (005930) climbed 2.8 percent, heading for a record high level in Seoul. The company said yesterday its mobile-phone handset sales this year reached all-time high of 300 million units.
Emerging-market stocks also rose as data on Dec. 9 showed confidence among U.S. consumers jumped in December to a six- month high. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 67.7 from a final November reading of 64.1. The gauge was projected to rise to 65.8, according to the median economist forecast in a Bloomberg News.
Wind Power Stocks
Today’s gains for MSCI’s developing-nation index pared this year’s losses to 18 percent. Companies in the index trade at 10.2 times estimated earnings, less than the four-year average multiple of 12.2, according to Bloomberg data.
Samsung SDI Co., the best performer in the developing gauge today, rose as much as 6.8 percent on speculation earnings will improve in 2012, helped by an expected increase in demand for lightweight Ultrabook laptops, said Kim Byung Ki, an analyst with Kiwoom Securities.
China Longyuan Power Group Corp. (916) gained the most in two months in Hong Kong. Citigroup Inc. rates Longyuan a “buy,” saying the mainland’s wind power industry is the beneficiary of a “positive surprise” at climate talks in Durban, South Africa. China, the world’s biggest emitter of fossil fuel, and India agreed yesterday to limit their emissions.
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