Emerging Stocks Decline to Three-Month Low as Thai Stocks Tumble
By Shikhar Balwani - Mar 22, 2013
Emerging-market stocks fell to a three-month low, led by energy companies, as PetroChina Co.’s earnings trailed estimates and Cyprus lawmakers prepared to debate the nation’s bailout today.
PetroChina, the nation’s biggest energy producer, sank to a four-month low in Hong Kong after net income dropped 13 percent. Yuexiu Property Co. (123) declined the most since October 2011 in Hong Kong after profit missed estimates. Hyundai Mobis Co. (012330), which got 12 percent of sales from Europe last year, slid to a six-week low in Seoul. Thailand’s benchmark index tumbled 4 percent and headed for the steepest weekly slump since October 2008.
The MSCI Emerging Markets Index (MXEF) lost 0.4 percent to 1,018.70 at 1:33 p.m. in Hong Kong. The gauge has fallen 2.3 percent this week and is headed for its biggest two-week decline since May. More than 60 percent of MSCI index companies that reported quarterly earnings this year trailed analysts estimates, data compiled by Bloomberg show. Stocks have retreated this week as Cyprus struggles to avoid a collapse of its banking system and reports showed Europe’s manufacturing decline is worsening.
“Markets have softened a bit of late because of the Cyprus problems as investors don’t like uncertainty,” Gopal Agrawal, chief investment officer at Mirae Asset Global Investments (India) Pvt., said by phone from Mumbai. “Earnings across the Asian emerging-markets space have been pressured by cost inflation and interest rates.”
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 0.9 percent. Indonesia’s Jakarta Composite Index (JCI) slid 0.1 percent to a one-week low. The Philippine Stock Exchange Index added 1.1 Percent.
Thai Slump
Thailand’s SET Index (SET) sank for a fifth day, the largest decline among Asian benchmark gauges, on concern valuations are expensive and as foreign investors sold domestic equities. The measure has tumbled 8.1 percent this week.
It rose to the highest level since 1994 last week to trade at 14 times estimated 12-month earnings, the most since Bloomberg began tracking data in 2006.
“This is just a normal short-term consolidation because of the short-term overprice,” Jessada Sookdhis, chief investment officer at CIMB-Principal Asset Management Co., which oversees about $1 billion of assets, said by phone from Bangkok. “The market is still on a good long-term uptrend.”
Trading volumes in South Korea’s Kospi index and Taiwan’s Taiex Index were at least 33 percent lower than the 30-day average for this time of day. Volumes for India’s S&P BSE Sensex index were 15 percent higher.
Cyprus Debate
Cypriot lawmakers will begin debate today on legislation to unlock bailout funds and prevent a financial collapse with a European Central Bank deadline to cut off funding for its lenders in three days.
Cypriot police scuffled with protesters, including employees of Cyprus Popular Bank Pcl (CPB), outside Parliament yesterday as President Nicos Anastasiades maneuvered at home and in Russia to raise cash.
The 21 countries in the MSCI index send about 26 percent of their exports to the European Union on average, according to the World Trade Organization.
South Korea’s won headed for a third weekly decline while Thailand’s baht was set for its biggest weekly gain in two months. Indonesia’s rupiah was poised for a third weekly drop.
A gauge of energy companies in the MSCI Emerging Markets Index declined 0.5 percent, the most among 10 industry groups. The broader gauge has lost 3.3 percent this year, compared with a 6.5 percent advance in the MSCI World Index (MXWO) of developed- country stocks. The developing-nations measure trades at 10.4 times estimated 12-month earnings, compared with the MSCI World’s multiple of 13.4, data compiled by Bloomberg show.
PetroChina Earnings
PetroChina (857) lost 2.3 percent, poised for the lowest close since Nov. 16. Net income dropped to 115.3 billion yuan ($18.6 billion) last year, it said in a statement yesterday. That compared with the 119.8 billion yuan mean of 27 analyst estimates compiled by Bloomberg.
Yuexiu Property tumbled 7.4 percent, its first drop in four days, after full-year net income and sales fell short of analysts’ estimates. Hyundai Mobis, the largest South Korean auto-parts maker lost 1 percent, its second day of declines.
To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net;
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.
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