Emerging Stocks Gain on Earnings as Batista Share Plan Lifts OGX
Developing-nation stocks rose for the first time in three days as companies from Vale SA (VALE3) to Hyundai Motor surged after reporting earnings that beat analysts’ estimates.
Vale, the world’s biggest iron-ore producer, jumped in Sao Paulo after recurring earnings topped estimates, pushing the Bovespa Index (IBOV) to its steepest gain in two weeks. Hyundai Motor, South Korea’s largest carmaker, climbed the most in six weeks in Seoul. OGX Petroleo e Gas Participacoes SA rose after saying billionaire Eike Batista may buy $1 billion of new shares.
The MSCI Emerging Markets Index climbed 0.5 percent to 999.12 at the close of trading in New York, led by consumer and material stocks. The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, gained 1 percent. Of the companies in the MSCI gauge that reported quarterly results today, 50 percent beat analysts’ estimates, compared with 36 percent this month through yesterday, data compiled by Bloomberg show.
“Some better-than-expected earnings have helped general sentiment,” Neil Shearing, chief emerging markets economist at Capital Economics Ltd., said by phone from London. “The big risks to the market come from Europe.”
The Shanghai Composite Index (SHCOMP) lost 0.7 percent as a leading gauge for the Chinese economy rose at a slower pace in September. Taiwan’s Taiex Index (TWSE) dropped 0.7 percent, slipping for a fifth day. Moscow’s Micex Index (INDEXCF) lost 0.4 percent to the lowest level since Oct. 15. The Philippine Stock Exchange Index (PCOMP) advanced 0.1 percent before the central bank announced it was cutting interest rates to a record low. The Bovespa climbed 1.2 percent.
Philippine bonds climbed before Bangko Sentral ng Pilipinas cut the rate it pays lenders for overnight deposits by 25 basis points, or 0.25 percentage point, to boost economic growth. The yield on the 12.25 percent securities due October 2014 fell three basis points, or 0.03 percentage point, to the lowest level since Oct. 10, according to closing prices at Philippine Dealing & Exchange Corp.
The South African rand strengthened 0.5 percent to 8.7425 per dollar, the first advance in three days. South African Finance Minister Pravin Gordhan announced plans to curb spending over the next three years in his mid-term budget released today. The Chilean peso and Indian rupee also climbed.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, dropped 3.1 percent.
The MSCI emerging-market index trades for 11.6 times forward earnings, compared with a multiple of 13.1 times for the MSCI World Index (MXWO), according to data compiled by Bloomberg.
The number of Americans filing first-time applications for unemployment benefits fell by 23,000 to 369,000 in the week ended Oct. 20 from a revised 392,000 the prior period, the Labor Department reported today in Washington.
Growth in China’s leading index for the economy slowed to 0.3 percent last month, the Conference Board, a New York-based research group, said in a statement today. The pace compared with a 1.7 percent gain in August.
“Investors are taking a selective approach toward emerging markets amid prospects of a slowdown in China, while the U.S. economy remains weak,” said Fitzgerald Aclan, who helps manage $20 billion at Manila-based BDO Unibank Inc.
Hyundai Motor (005380) gained 3.9 percent in Seoul, the largest increase since Sept. 14. Third-quarter net income climbed 13 percent to 2.17 trillion won ($2 billion) in the three months ended Sept. 30, the company said today. That beat the 2.05 trillion won average of analyst estimates compiled by Bloomberg.
PKN Orlen SA (PKN), Poland’s largest oil refiner, rose 1 percent after the company posted profit of 1.37 billion zloty ($427 million) in the third quarter, beating the 1.02 billion zloty median estimate of six analysts surveyed by Bloomberg.
Vale surged 5.6 percent after recurring earnings topped analysts’ estimates, signaling that efforts to cut costs and delay projects is paying off. Bradespar SA, Banco Bradesco SA’s investment arm that is part of the group that controls Vale, jumped 5.9 percent, its biggest one-day gain in a year and the steepest advance in the MSCI index.
OGX, a Rio de Janeiro-based oil producer controlled by Batista, gained 2.6 percent. The billionaire granted a put option that would require him to buy as much as $1 billion of new stock in the company at a 36 percent premium.
Mail.ru Group Ltd. (MAIL) jumped the most in almost six weeks in London after Russian billionaire Alisher Usmanov’s Internet company boosted revenue and sold a portion of its Facebook Inc. holding. The company’s sales surged 37 percent to 4.97 billion rubles ($159 million) in the third quarter.
Cnooc Ltd. (883), China’s largest offshore energy explorer, rose 1.4 percent in Hong Kong after saying third-quarter oil and gas production increased. Samsung Electro-Mechanics Co. surged 3.9 percent in Seoul, the most since July 31, after reporting profit in the third quarter following a year-earlier loss.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 276 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
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