Emerging-Market Stocks Advance as China, India Manufacturing Increases

By Ye Xie and Andras Gergely - Jan 3, 2012 5:45 AM GMT+0700

Emerging-market stocks gained for a third day as reports showed growth in manufacturing in countries from China to India, while a factory output gauge in Germany beat forecasts.

The MSCI Emerging Markets Index (MXEF) advanced 0.1 percent to 917.08. India’s Sensex gained 0.4 percent and Brazil’s Bovespa added 1.9 percent. KGHM Polska Miedz SA led Polish stocks to their biggest rally in a month, and Mexican stocks rose 0.7 percent. Equity markets in China, Russia, Malaysia, South Africa and Thailand were closed for holidays.

Manufacturing gauges for China and India increased, while Germany’s factory output beat estimates in December, boosting the prospects of its central European trading partners.

“The figures from today show we’re absolutely not seeing a hard landing,” said Andreas Rees, an economist at UniCredit Markets & Investment Banking in Munich. “There’s no massive uncertainty shock around the globe that’s weighing heavily on investment activity.”

The MSCI’s emerging-markets index slipped 20 percent last year, while the index for stocks in developed countries lost 7.6 percent. The decline in the developing nations’ gauge (MXEF) was the most since a 54 percent slump in 2008, which saw the collapse of Lehman Brothers Holdings Inc.

The MSCI Emerging Markets index trades at 10 times estimated profit, down from 13.3 times at the end of 2010, and compares with a multiple of 12.2 for the MSCI World Index.

Indian shares rose for the first time in five days. Manufacturing grew at the fastest pace in six months, with the PMI increasing to 54.2 in December from 51 in November, HSBC Holdings Plc and Markit Economics said in an e-mailed statement today.

Brookfield, Gafisa

Brazilian shares advanced after economists cut their estimates for inflation in 2012 for a fifth straight week to 5.32 percent from 5.33 percent. Real estate developers Brookfield Incorporacoes SA (BISA3), MRV Engenharia e Participacoes SA (MRVE3) and Gafisa SA (GFSA3) led gains among members of the index.

Embraer SA (EMBR3) gained as the world’s fourth-largest plane builder and U.S.-based Sierra Nevada Corp. were awarded a $355 million contract to provide 20 aircraft to the U.S. Air Force.

Poland’s benchmark WIG20 Index climbed 2.3 percent. Copper and silver producer KGHM jumped 6.6 percent after the Treasury Ministry proposed to lower a new tax on the extraction of the metals.

Mexico, Hungary

Mexico’s IPC index advanced after the country’s central bank said that remittances rose 8.9 percent in November from a year earlier to $1.77 billion. Grupo Financiero Banorte gained 1.5 percent.

Hungary’s BUX stock index (BUX) rose 1 percent. The country’s purchasing managers’ index rose to 48.5 points in December from 47.8 points the previous month, the Hungarian company MLBKT said in a report today.

The Kospi Index of South Korean stocks rose less than 0.1 percent. South Korea’s export growth will probably slow to 6.7 percent this year from 19.6 percent in 2011, the Ministry of Knowledge Economy said in a statement. Finance Minister Bahk Jae Wan said the economic outlook will be more uncertain and difficult in 2012 and called for a strengthening of contingency plans to prevent contagion from Europe’s debt crisis.

Hyundai Mipo Dockyard Co. (010620), a unit of the world’s biggest shipbuilder, retreated 2.2 percent in Seoul after a customer in Liberia asked for a delay in the delivery of vessels by a year. Posco (005490), South Korea’s largest steelmaker, retreated 1.1 percent.

Indonesia said exports (IDEXPY) rose 8.3 percent in November from a year earlier, compared with the 16.7 percent pace reported for October. The Jakarta Composite index slid 0.3 percent.

Germany’s manufacturing gauge based on a survey of purchasing managers to 48.4 in December, beating the initial estimate of 48.1 published on Dec. 15. A reading below 50 indicates contraction. The Czech PX Index jumped 1.4 percent.

To contact the reporters on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net; Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net