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Emerging Stocks Risen First Day Three; India Shares Fall

30 Oct 2012

Emerging-market stocks rose for the first time in three days as commodities gained and consumer discretionary shares rebounded from a six-week low. India’s benchmark equity gauge tumbled the most in three weeks after the central bank refrained from cutting interest rates.

Catcher Technology Co. (2474) rallied 6.7 percent in Taipei after the stock was upgraded at Macquarie Group Ltd. Grupa Lotos SA (LTS),Poland’s second-largest oil refiner, climbed to the highest level in more than a year after profit beat analysts’ estimates.State Bank of India Ltd. sank the most in almost three months. OAO Gazprom, Russia’s biggest natural gas exporter, dropped to a three-month low after the board approved a 25 percent spending increase this year.

The MSCI Emerging Markets Index gained 0.4 percent to 993.73 at 1:05 p.m. in London. Copper rose in London on the prospects on increased consumption in China. Bank of America Merrill Lynch raised its forecast for the country’s economic growth to 7.7 percent from 7.6 percent this year. India faces a monthly inflation rate of almost 8 percent, limiting the central bank’s scope to join nations from Brazil to Thailand in extending rate cuts.

“The absence of bad news is good news,” Aurelija Augulyte, an emerging-markets strategist at Nordea Bank AB in Copenhagen, said by email. “The markets are at the turn towards risk-off, but not there yet.”

The MSCI Emerging Markets Index has lost 1 percent this month, headed for its worst month since May. Equity trading volumes in some Asian markets were lower than average asHurricane Sandy shuttered U.S. stock markets for a second day and sent floodwaters gushing into New York City.

Low Volumes

The number of shares changing hands for South Korea’s Kospi Index (KOSPI) companies was 44 percent below the 30-day average, according to data compiled by Bloomberg. Trading volumes were about 12 percent lower than average for the Shanghai Composite Index. (SHCOMP)

“With the U.S. closed the likelihood of other markets moving in a big way is substantially lower,” Maarten-Jan Bakkum, an emerging-market strategist at ING Investment Management in The Hague, said by e-mail.

Russia’s Micex index fell for a sixth day, the longest losing streak since May, while Brazil’s Bovespa jumped 0.7 percent. The BSE India Sensitive Index (SENSEX) lost 1.1 percent while China’s Shanghai Composite Index added 0.2 percent. Taiwan’sTaiex Index rallied 1.3 percent, snapping a seven-day slide, which was its longest losing streak since May 2010. Benchmark indexes in Poland and the Czech Republic snapped a two-day slump while Turkey gained as trading resumed following a holiday.

Current Account

South Korea’s Kospi index advanced 0.4 percent and the won gained to a 13-month high as data showed the country’s current-account surplus widened to the second biggest on record in September. The Indonesian rupiah was the worst-performing emerging-market currency tracked by bloomberg.

A gauge of consumer discretionary and technology companies led gains among the 10 industry groups in the MSCI Emerging Markets Index (MXEF), adding more than 0.7 percent. The overall developing-nations measure has climbed 8.4 percent this year, trailing a 10 percent increase by the MSCI World Index. (MXWO) The emerging-markets index trades at 11.5 times estimated earnings, compared with the MSCI World’s multiple of 13.1, according to data compiled by Bloomberg.

Hyundai Motor Co., South Korea’s largest automaker, jumped 2.5 percent, rebounding from its biggest decline in seven weeks yesterday. Kia Motors Corp. (000270), the country’s second-largest carmaker, climbed 2.3 percent.

Beating Estimates

Grupa Lotos advanced 5 percent to the highest since August 2011. The company reported net income was 626 million zloty ($195 million) in the third quarter, beating the median estimate of 459.6 million zloty in a Bloomberg survey of five analysts.

State Bank of India, the nation’s biggest lender, dropped 4.3 percent, the most since Aug. 9.

Gazprom fell 2.1 percent. The board today approved a revised, 975 billion-ruble ($31 billion) budget for the year, the Moscow-based company said in an e-mailed statement today. The program, which is 25 percent higher than the initial plan adopted in December, includes 890 billion rubles of capital expenditure on gas production, transportation and storage projects.

Catcher Technology advanced the most since May 2. The stock was raised to neutral at Macquarie.