Emergin-Market Equities Advance as Profits Boost Russia
Emerging-market stocks rose for a fourth day, trimming declines in the week, as companies including OAO Gazprom and Tim Participacoes SA reported rising profits.
The MSCI Emerging Markets Index (MXEF) advanced 0.4 percent to 1,019.50 by 4:30 p.m. in New York, reducing its weekly drop to 0.2 percent, the sixth straight decline. Telecommunications companies from Samsung SDI Co. to Telekomunikasi Indonesia Persero Tbk (TLKM) were among the leading gainers, as Russia’s Micex Index jumped the most in a week. Brazil’s Bovespa Index declined while the IPC Index in Mexico rose, erasing earlier losses.
Gazprom, Russia’s gas-export monopoly, boosted fourth- quarter profit by 22 percent to 383 billion rubles ($13 billion), according to a statement today, beating the median analyst estimate of 342 billion rubles. Tim Participacoes, the Brazilian unit of Telecom Italia SpA, said yesterday that net income gained 30 percent in the first three months of the year. Samsung SDI said first-quarter earnings gained 11 percent.
Company earnings have come in better than the market expected, helping to “drive global risk appetite by investors,” Neil Shearing, a senior emerging market analyst at Capital Economics Ltd., said by phone from London. “There are also signs the European crisis is not going away so there are some concerns about growth and sustainability in emerging markets like Brazil.”
Standard & Poor’s cut Spain’s credit rating by two steps to BBB+, the third-lowest rating, with a negative outlook, on concern the country will have to provide further fiscal support to banks as its economy contracts. The U.S. economy expanded at an annual 2.2 percent rate in the first quarter, falling short of the median forecast for 2.5 percent growth of 85 economists.
The MSCI Emerging Market Index retreated for a sixth week, the longest losing streak since October 2008. MSCI’s developing- nations gauge has climbed 11 percent this year and trades at 10.6 times estimated profit. That compares with a multiple of 12.6 times for the MSCI World Index of advanced countries, which has added 9.8 percent in 2012.
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF to track developing-nation shares, rose 0.1 percent to $42.31 in New York.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, fell 2.7 percent to 23.52 for a fourth day of declines.
Cyrela Brazil Realty S.A. was the biggest decliner in Brazil’s Bovespa index, retreating 7.9 percent, the most since 2009. The Bovespa declined 0.8 percent, dragging weekly losses to 1.3 percent.
Embraer SA, the world’s fourth-largest planemaker, posted first-quarter net profit that fell 36 percent on cost increases. The Sao Jose dos Campos, Brazil-based company rose 0.4 percent, reversing earlier losses of as much as 2.7 percent in Sao Paulo.
Tim Participacoes, a telecommunications company, gained 1.6 percent on first-quarter net income that rose 29.5 percent to 276 million reais ($146.2 million), the company said in a regulatory filing today.
Russia’s Micex Index (INDEXCF) gained 1.6 percent in Moscow, erasing losses of 1 percent yesterday. OAO Uralkali, the world’s biggest potash producer by output, added 1.3 percent. Brazilian customers of the company’s export trader Belarusian Potash Co. agreed to buy the product, used in fertilizer, at $550 a metric ton, BPC spokesman Fillip Gritskov said.
OAO GMK Norilsk Nickel climbed as much as 2.4 percent, the first increase in five days, after Russian billionaire Alisher Usmanov said he’s increasing the stake he controls in the country’s biggest mining company.
The BUX Index (BUX) rose 0.3 percent in Hungary as OTP Bank Nyrt. (OTP), the country’s largest lender, retreated for the first time in four days. The company’s shares dropped 0.8 percent after the cut to Spain’s sovereign credit rating, adding to concern that the debt crisis will worsen as Hungary works to obtain aid.
Poland’s WIG20 Index climbed 1.6 percent. Jastrzebska Spolka Weglowa SA (JSW), the European Union’s biggest coking-coal producer, jumped 3.9 percent, a fourth day of gains. Deutsche Bank AG recommended buying the Polish company’s shares on the prospect of higher coal prices and “strong” production volumes this year.
Telekomunikasi, based in Bandung, Indonesia, climbed 6.3 percent to 8,500 rupiah. The company’s first-quarter net income rose to 3.33 trillion rupiah ($362.4 million) from 2.82 trillion rupiah a year earlier, it said in a statement on its website.
China’s Shanghai Composite Index lost 0.3 percent today. South Korea’s Kospi Index gained 0.6 percent.
Zijin Mining Group Co. (2899), China’s biggest gold miner by market value, slumped 9.3 percent in Hong Kong after saying first-quarter profit slid as costs climbed. The company’s shares dropped to HK$2.63, the lowest close since Oct. 10. Profit in the first quarter declined 23 percent to 1.07 billion yuan ($169.6 million).
“It will take some time for China to become the main driver for the region’s economic growth again,” said Kavee Chukitkasem, an investment strategist at Kasikorn Securities Co. Ltd. in Bangkok. “The European debt problem will still be a drag on markets as Spain may turn into another time bomb.”
Samsung Electronics Co Ltd., Asia’s largest consumer- electronics maker, rose to 1.374 million won, a record close. The company posted first-quarter net income that jumped 81 percent from a year earlier to 5.05 trillion won ($4.4 billion), the company said in a statement today.
Samsung SDI Co. (006400), a supplier for Apple Inc., jumped 7.5 percent to 151,000 won, the biggest gainer in the developing- market stock index, after reporting quarterly profit grew 11 percent, more than estimated.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 352, according to JPMorgan Chase & Co.’s EMBI Global Index.