Azernews.Az

By Bloomberg

Emerging-market energy companies rallied for the first time in four days as oil’s rebound boosted their earnings outlook, outweighing evidence that economies in Russia and China are showing signs of weakness.

The 52-member MSCI developing-country energy gauge climbed 1 percent, led by Sasol Ltd. in Johannesburg and OAO Tatneft in Moscow. China’s official manufacturing index unexpectedly dropped below 50 for the first time since 2012, sending stocks in Shanghai lower for the fifth day. A separate Russian gauge slipped to a 5 1/2-year low, pushing the ruble down as much as 2.3 percent. It reversed losses as Brent jumped following its best week in four years. Turkey’s lira ended a five-day rout.

“A bounce in the oil price is sending a positive growth signal to the market,” Tony Hann, the head of emerging markets at Blackfriars Asset Management Ltd. in London, said by e-mail. Data out of China “could affect emerging-market sentiment in the short term, but the notion that China’s economy is slowing surely cannot now be a surprise to many,” he said.

The drop in China’s Purchasing Managers’ Index below the level that signals a contraction stoked speculation Asia’s largest economy will need to join the latest wave of global monetary easing to shore up sentiment. The Bank of Russia’s move to cut its key interest rate by 200 basis points to 15 percent on Friday undermined the confidence of investors.

The MSCI Emerging Markets Index was little changed at 961.70 by 1:41 p.m. in London. The measure’s 12-month projected price-to-earnings ratio is at 11.4, a 28 percent discount to developed-country equities in the MSCI World Index.

Oil Rebound

Of the emerging gauge’s 10 industry groups, five rose, led by energy companies. Sasol climbed 4.7 percent in Johannesburg and Tatneft jumped 5.5 percent in Moscow. The dollar-denominated RTS Index rose 1.6 percent, its first gain in four days. Petroleo Brasileiro SA climbed 1.1 percent in Sao Paulo after falling on Friday to an 11-year low.

Following the oil rebound today, the ruble climbed less than percent against the dollar and government bonds extended gains for a second day, sending the five-year yield down 24 basis points to 14.63 percent. Russia’s PMI fell to 47.6 last month from 48.9 in December, HSBC Holdings Plc said Monday.

Stocks in Bulgaria, Ukraine and Romania also fell, while equities in Saudi Arabia, Egypt and Turkey rose.

The lira, which slid to a record on Friday, traded 1 percent higher at 2.4174 per dollar. It had weakened after the central bank said it may convene a meeting on Feb. 4 if data tomorrow show inflation fell by at least 1 percentage point.

ETF Outflows

Investors pulled almost $1.4 billion out from U.S. exchange-traded funds that invest in emerging markets during January, even as money started returning in the second half of the month.

China’s PMI fell to 49.8 last month from 50.1 in December, missing the median estimate of 50.2 in a Bloomberg survey of analysts. The slide follows the biggest weekly stock market drop in a year and fiscal data that showed the weakest revenue growth since 1991. The Shanghai Composite Index slid 2.6 percent, taking this year’s decline to 3.3 percent.

“China’s economy has been the biggest risk for equities investors this year,” Jeffrosenberg Tan, a money manager at PT Sinarmas Asset Management, said by phone from Jakarta. “This will have a ripple effect on other emerging economies, particularly in Asia.”

Markets in Vietnam and India also fell. China Minsheng Banking Corp. slid 3.1 percent in Hong Kong. The lender said Saturday that President Mao Xiaofeng had stepped down for “personal reasons.” The announcement came after Caixin reported that authorities had taken him in to assist with an investigation.

China Railway Construction Corp. sank as much as 8 percent after Mexico stalled a high-speed rail project. Hyundai Heavy Industries Co. rallied 5.3 percent as oil boosted the outlook for exploration-related orders.