Most emerging stocks drop as Tencent slumps

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Kuala Lumpur - Most emerging-market stocks fell as Tencent slumped after its outlook disappointed investors and concern grew that China’s efforts to support economic growth will be insufficient.

South Korea’s won rallied.

Tencent, Asia’s biggest Internet company, sank 2.3 percent in Hong Kong after saying it expects growth in mobile-game revenue to plateau.

Naspers, which owns shares in Tencent, slid 3.9 percent in Johannesburg.

A gauge of Hong Kong-traded Chinese shares retreated from an eight-month high.

Russia equities rose for a fifth day, the longest rally in two months.

The won rose the most in four months versus the dollar after the central bank cut interest rates to help bolster economic growth.

The MSCI Emerging Markets Index lost 0.1 percent to 1,070.34 at 9:51 am in London.

The gauge rose to a two-week high yesterday on bets China would take steps to support the economy.

China is unlikely to introduce any “meaningful” stimulus because the government is content with the slower pace of economic growth, according to Credit Suisse.

China is in “between having to achieve the nation’s growth target and also not go into excessive credit growth,” Manpreet Singh Gill, a senior investment strategist at Standard Chartered Bank, said by phone in Singapore.’ he said.

“Markets have been rangebound, so we need to see some underlying fundamentals to break out from that.”

 

Stock Valuations

 

The developing-nation measure has risen 6.8 percent this year and trades at 11.2 times 12-month projected earnings, data compiled by Bloomberg show.

The MSCI World Index has gained 2.9 percent and is valued at a multiple of 15 times.

Tencent sank the most in a week, the biggest drag to the emerging-markets gauge.

The stock was cut to neutral by analysts at HSBC, who cited the games forecast.

The company’s sales growth this quarter is expected to slow to 31 percent, according to the average of eight analyst estimates compiled by Bloomberg.

That would be the slowest since the June quarter of 2007.

The Hang Seng China Enterprises Index, a gauge of mainland shares traded in Hong Kong, slid 1.1 percent.

The Shanghai Composite Index lost 0.7 percent as Jiangxi Copper and Aluminum Corporation of China slid at least 2 percent.

The Jakarta Composite Index dropped 0.5 percent, ending a three-day advance, while the rupiah erased gains after Indonesia’s central bank said the current-account deficit widened to near a record last quarter as it left its benchmark rate on hold.

Turkey’s Borsa Istanbul 100 Index lost 0.3 percent, while the lira weakened 0.2 percent.

 

Lowest Valuations

 

Russia’s Micex Index rose 0.5 percent to the highest level since July 24, led by OAO Gazprom and OAO Lukoil as the lowest valuations among emerging markets attracted investors.

The gauge has retreated 3.2 percent since the end of February, before Russia’s incursion into Ukraine’s Crimea peninsula.

The measure last traded at 5 times estimated earnings, compared with a multiple of 5.3 before the invasion, making it the cheapest market among developing nations.

India’s equity gauge added 0.7 percent after data showed the nation’s July wholesale-price inflation matched estimates.

Philippine Long Distance Telephone surged 4 percent and Ayala Land rose 2.1 percent after their weightings were increased in the MSCI Philippines Index.

The Philippine Stock Exchange Index rose 1.1 percent to the highest level since May 29, 2013.

Seven out of 10 industry groups in the emerging-market index fell today, paced by financial shares, while health-care companies and technology shares advanced the most.

Hon Hai Precision Industry added 2.8 percent in Taipei and Advanced Semiconductor Engineering jumped 5.4 percent after profits at both the companies beat estimates.

Philippine, Thai and Malaysian currencies rose at least 0.4 percent.

The won strengthened 0.8 percent after South Korea’s central bank lowered benchmark borrowing costs for the first time since May 2013 to revive economic growth.

The Bank of Korea cut its seven-day repurchase rate to 2.25 percent from 2.5 percent, as predicted by 14 of 18 analysts surveyed by Bloomberg. - Bloomberg News



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