EM Morning Roundup
EM Follows US Higher, China Re-Opens IPO
June 26, 2014
Just like the U.S. stock market, which this week moved against macroeconomic data as my colleague Ben Levisohn observed yesterday, emerging Asia, except for India, shrugged away the disappointing U.S. first-quarter GDP data and moved higher today, on the hope that the U.S. economy will rebound.
Hoping for a quick return, Chinese investors have good appetite for new IPO stocks. The three stocks that started debut trading all jumped today, after a four-month IPO freeze. TheShanghai Composite Index gained 0.6%.
Macau stocks jumped after the government clarified that it would not close the jewelry and watch retailers in casinos. Sands China (1928-HKG) rose 4%. Wynn Macau (1128-HKG) jumped 5.5%. MGM China (2282-HKG) advanced 3.7%. The Hong Kong Hang Seng Indexrose 1.4%, recovering from Monday’s loss. The Shanghai Composite Index advanced 1.5%.
China’s central bank People’s Bank Of China halted selling repos (i.e. withdrawing liquidity from the banking system) after the benchmark money market rate rose to a seven-week high as banks started hoarding cash for the quarter-end.
A new survey conducted by U.S.-based Urban Land Institute showed investors were turning cautious on China’s property market in April and May.
India will extend tax cuts to automobiles and capital goods by six months to the end of December.
But the government will defer an increase in natural gas prices by three months, sending Oil & Natural Gas Corp. (ONGC, 500312-BOM) and Reliance Industries (500325-BOM) down 5.9% and 3.7% respectively. The S&P BSE SENSEX Index dropped 1%.
Reliance Communications (532712-BOM) slumped 3.6% to 146 rupees after it raised close to $1 billion from equity sale, as the mobile operator tried to de-leverage. The final pricing for the block sale was 142.14 rupees per share.
Petrobras (PBR) agreed to pay the Brazilian government $6.8 billion for new oil rights, a decision analysts disliked, before it was presented to the company board. Shares of Petrobras slumped 5.8% in the last two trading days.
The MICEX Index dropped 0.4% after German Chancellor Angela Merkel joined the U.S. in warning that sanctions against Russia could be “back on the agenda.” Yesterday, pro-Russia rebels shot down a Ukrainian military plane.