Emerging Stocks Decline to Three-Month Low as Thai Stocks Tumble

By Shikhar Balwani 

Emerging-market stocks fell to a three-month low after PetroChina (857) Co.’s profit trailed estimates and Thailand’s bourse said it may raise margin requirements, sparking the biggest tumble in the SET Index (SET) since October 2011.

PetroChina, the nation’s biggest energy producer, sank to a three-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. Thailand’s benchmark index headed for the steepest weekly slump since September 2011. OAO Sberbank, Russia’s largest lender, fell 1 percent, contributing to the Micex Index (INDEXCF)’s 0.5 percent slide.

The MSCI Emerging Markets Index lost 0.6 percent to 1,016.06 at 5 p.m. in Hong Kong. The gauge has fallen 2.5 percent this week, headed for its biggest weekly decline since May. More than 60 percent of MSCI index companies that reported quarterly earnings this year trailedanalysts 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 0.4 percent. The Jakarta Composite Index (JCI) slid 1.7 percent, the most since Aug. 30. The Philippine Stock Exchange Index added 0.7 percent. The S&P BSE Sensex slid 0.5 percent, bound for its worst weekly loss in 15 months.

Thai Slump

Thailand’s SET Index fell 3.2 percent, the largest decline among Asian benchmark gauges, on concern the bourse may increase margin requirements on equity trading. Power producer Glow Energy Pcl (GLOW) sank 5.3 percent in Bangkok and Airports of Thailand Pcl slumped 3.4 percent.

The SET has tumbled 7.3 percent this week, poised for the biggest weekly slump since September 2011. 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 32 percent lower than the 30-day average for this time of day. Volume for the FTSE Bursa Malaysia KLCI Index was 17 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.

Cyprus has failed to gain the financial support from Russia that it sought after rejecting a European bailout plan, Cypriot Finance Minister Michael Sarris said today.

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 weakened for a third week while Thailand’s baht lost 0.3 percent against the dollar. Indonesia’s rupiah was poised for a third weekly drop.

The MSCI Emerging Markets Index has lost 3.7 percent this year, compared with a 6.4 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 lost 1.4 percent, the lowest since Dec. 3. 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 percent, its first drop in four days, after full-year net income and sales fell short of analysts’ estimates.

Beijing Enterprises Holdings Ltd. (392) jumped 5.9 percent in Hong Kong, the biggest gain in theMSCI Emerging Markets Index. (MXEF) The company’s earnings are due on March 28.

PT Bank Danamon Indonesia jumped 5.8 percent in Jakarta, poised for its highest close in 11 months. DBS Group Holdings Ltd.’s bid for the lender is set to be approved as soon as this month as Singaporean and Indonesian regulators near an agreement over bank access, according to Chairul Tanjung, an economic adviser to Indonesia’s president.

To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net;

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