Emerging Stocks Keep Losses as Jobs Report Spurs Fed Stimulus Speculation

Emerging-market stocks stayed lower, paring the benchmark index’s sixth weekly gain, after U.S. jobs data and disappointing earnings overshadowed advances in China and rising fund inflows to developing nations.

The MSCI Emerging Markets Index dropped 0.1 percent to 1,101.27 at 5 p.m. New York time, a second day of declines. The measure is on its longest winning streak since March after it gained 1.4 percent this week. China’s Shanghai Composite Index rose 3.1 percent, while benchmark gauges in Taiwan, South Korea, the Philippines, Indonesia and Thailand slumped. Malaysia’s index was little changed.

Developing-nation stocks maintained declines after new payrolls data released in the U.S. showed employers cut 95,000 jobs in September, 90,000 more than the median estimate of economists surveyed by Bloomberg, boosting speculation the Federal Reserve may take further steps to stimulate the economy.

The jobs report is a “strong signal” for further easing by the Fed, said Bill Gross, manager of the world’s biggest bond fund, in a radio interview on “Bloomberg Surveillance” with Tom Keene.

Samsung Electronics Co., Asia’s biggest maker of semiconductors, fell for a second day after profit missed analysts’ estimates. China Shenhua Energy Co. and PetroChina Co. surged, leading a rally in energy and raw-materials stocks as the country’s markets reopened after five days of holidays. Moody’s Investors Service cited China’s economic growth outlook for a possible upgrade in its debt rating.

Slowdown Concerns

“While liquidity will drive the markets, there might be short-term hiccups in terms of earnings forecasts and concerns of a slowdown,” said Scott Lim, chief executive officer of Kuala Lumpur-based MIDF Amanah Asset Management Bhd., which oversees the equivalent of $670 million. “Liquidity can put up a strong front to the negative sentiment.”

Overseas investors pumped the most cash into emerging- market equities since late 2007 in October and Asia bond funds attracted more capital on further signs growth in developed nations is slowing, according to EPFR Global.

The equity funds received net inflows of more than $6 billion in the week ended Oct. 6, the biggest amount in 33 months, the Cambridge, Massachusetts-based research company said in an e-mailed statement. Investors withdrew $3.2 billion from U.S. stock funds, the most in five weeks.

MSCI, S&P

The MSCI Emerging Markets Index rallied 17 percent last quarter, the most in a year, on speculation developing nations will be able to sustain their recovery and that central banks around the world may be prepared to take more measures to spur growth.

The ruble was little changed at 29.85 per dollar. Brazil, Russia, India and China will put up “strong resistance” to attempts to make a “harsh appraisal” of currency controls at the annual meeting of the International Monetary Fund and World Bank this week in Washington, Russian Deputy Finance Minister Dmitry Pankin told reporters late yesterday.

A “bubble” may be forming in the country’s financial markets, Pankin also told reporters today. Corporate bonds are selling like “hot cakes,” he said. Dollar bonds sold by Russian companies yield 5.38 percent, an all-time low, down from an average of 20.4 percent in October 2008, according to JPMorgan Chase & Co.’s EMBI+ index.

South Korea, Thailand

Hyundai Department Store Co., a South Korean department store chain, fell 3.8 percent in Seoul trading after BNP Paribas SA and Hyundai Securities Co. cut recommendations on the stock. BNP lowered the stock’s rating to “reduce” from “hold,” citing a potential slowdown in same-store sales growth. The retailer was downgraded to “market perform” from “buy” at Hyundai Securities.

Sri Trang Agro-Industry Pcl, Thailand’s biggest publicly traded rubber producer, added 3.2 percent in Bangkok, a record, after rubber prices in Shanghai climbed. China is Thailand’s biggest export market for rubber. China Petroleum & Chemical Corp., Asia’s biggest refiner, rose 2.9 percent in Shanghai trading after its parent agreed last week to pay $7.1 billion for a stake in Repsol YPF SA’s Brazilian unit.