Emerging stock volatility drops

Emerging-market stock volatility fell to the lowest level since 1997 as the benchmark index headed for its best week in a month. Shares in Russia and Brazil fell while stocks traded in Hong Kong rose for a second day.

OAO Sberbank, Russia’s largest lender, dropped the most in three months. Harmony Gold Mining Co. and Gold Fields Ltd. retreated in Johannesburg as gold slid to a five-month low.

Geely Automobile Holdings Ltd. advanced to the highest level in more than two years in Hong Kong, extending yesterday’s gain after January sales jumped to a record.

The MSCI Emerging Markets Index added less than 0.1 percent to 1,066.48 at 1:10 p.m. in London.

The measure’s 50-day volatility sank to 8.06 today, the lowest level since July 15, 1997, data compiled by Bloomberg show.

The gauge has increased 0.5 percent this week, heading for its biggest weekly advance since the five days ended January 18.

“The market is very quiet and will have to be driven by earnings,” Vivien Loh, who helps manage the equivalent of $420 million at Phillip Capital Management Sdn., said by phone from Kuala Lumpur.

About 60 percent of companies in the emerging-stocks gauge that have reported earnings for the quarter ended December 31 have missed estimates, according to data compiled by Bloomberg.

Moscow IPO

Russia’s Micex Index lost 0.8 percent and Brazil’s Bovespa index fell 0.3 percent.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 0.2 percent.

Sberbank, the biggest stock in the Micex Index, plunged 1.8 percent in Moscow.

The Micex slipped 0.8 percent on trading volume 28 percent above the 30-day average.

The ruble weakened 0.3 percent versus the dollar as oil declined.

The Moscow Exchange raised $498 million in the biggest initial share sale on the nation’s bourse since 2007, pricing at the bottom of its target range.

The stock, which trades under the MOEX RX ticker, was unchanged at 55 rubles in its debut.

Harmony Gold, Africa’s third-largest producer of the metal, dropped 4.3 percent, the most since January on a closing basis.

Gold Fields fell 4.1 percent to the lowest level since December 3.

Gold slid 0.5 percent to $1,628.20 an ounce in New York, after sinking to as low as $1.625, the lowest since August.

Mining Royalties

South Africa’s rand weakened 0.4 percent versus the dollar, its first decline in three days, after President Jacob Zuma said he will review mining royalties as he comes under pressure to reduce poverty and inequality in the country.

A gauge of technology stocks in the MSCI Emerging Markets Index climbed 0.5 percent to a one-month high, the most among 10 industry groups on the developing-nation measure.

Energy and material stocks led declines.

The broader gauge has risen 1 percent this year, trailing the 5.3 percent gain in the MSCI World Index of developed-country stocks.

Cheaper Valuations

The emerging-markets gauge trades at 10.4 times estimated profit, compared with the MSCI World’s 13.8 times, according to data compiled by Bloomberg.

Equity funds drew inflows of $1.8 billion in the week to February 13, luring less investment than bond funds for the first time in 10 weeks, Markus Rosgen and Yue Hin Pong, analysts at Citigroup Inc., wrote in a report today, citing data from research company EPFR Global.

Asian equity funds attracted $535 million, a 23rd week of inflows, slowing from $981 million last week as markets shut for the Lunar New Year holidays.

The extra yield investors demand to own emerging-market debt over US Treasuries slipped one basis point, or 0.01 percentage point, to 274 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

The gauge of mainland Chinese companies rose in its second day of trading this week as New China Life Insurance Co. led gains among insurers. Indonesia’s Jakarta Composite Index climbed 0.5 percent to a record with trading volumes were 67 percent higher than the 30-day average.

India’s Sensex slipped 0.2 percent. Markets in mainland China and Taiwan will re-open on February 18 after a week-long holiday.

Geely Automobile

Geely Automobile, a unit of the Chinese owner of Volvo Cars Corp., surged 7.7 percent to its highest close since November 12, 2010.

Car sales volume in January increased 67 percent from a year earlier, the company said yesterday.

PT Bank Rakyat Indonesia, the nation’s second-largest lender by assets, advanced 1.8 percent as financial stocks rose the most among nine industry groups in the nation’s benchmark index.

“Overall the growth in the banking sector is still positive,” Alvin Pattisahusiwa, chief investment officer at PT Manulife Asset Management, said by phone in Jakarta.

Dr. Reddy

Dr. Reddy’s Laboratories Ltd., India’s second-biggest drugmaker by market value, slid 3 percent after Bank of America- Merrill Lynch cut the stock to neutral from buy.

Hyundai Merchant Marine Co. slipped 4.3 percent in Seoul to the lowest since March 2007, after reporting an operating loss of 519.8 billion won ($482 million) in 2012.

South Korean’s won has strengthened 1.6 percent against the dollar this week, amid speculation the region’s policy makers will refrain from reining in exchange rates. - Bloomberg