Most Emerging Stocks Decline as Samsung Slides, Tencent Gains

Most emerging-market stocks fell after Samsung Electronics Co. reported earnings that missed estimates, countering a rally in health-care and Internet shares.

Samsung slid the most in a week in Seoul while Hindustan Unilever Ltd. lost 4.9 percent in Mumbai after sales growth slowed. Turcas Petrol AS (TRCAS) retreated to a one-month low after Turkey's finance ministry started a tax inspection into a joint venture. Sihuan Pharmaceutical Holdings Group Ltd. added 3.6 percent in Hong Kong after RHB Capital Bhd. raised its earnings forecast. Tencent Holdings Ltd. (700) climbed to a record in Hong Kong after internet companies in the U.S. surged.

About 343 stocks dropped and 269 rose in the MSCI Emerging Markets Index, which added 0.2 percent to 964.17 as of 4:11 p.m. in Hong Kong. The gauge has risen 1.5 percent this week, heading for a third weekly increase. About 54 percent of companies in the MSCI index that posted quarterly earnings this month have trailed analyst estimates. The Federal Open Market Committee will hold a meeting next week, and a July 31 report may show U.S. economic growth slowed in the April-to-June period.

"The earnings results are mixed so far, with investors being cautious as some bad news can still come to shake markets," Attila Vajda, head of institutional clients at ACB Securities Co., said in Ho Chi Minh City.

Samsung (005930), the world's biggest smartphone maker, dropped 0.9 percent, the largest drag to the MSCI developing-nation gauge, after its second-quarter earnings trailed estimates as market saturation for high-end handsets curbed sales growth for its flagship Galaxy S4.

Biggest Gain

A gauge of health-care companies in the MSCI Emerging Markets Index rose 0.7 percent, the most among 10 industry groups. Sihuan Pharmaceutical gained to the highest level since January 2011 after RHB raised its 2013-2015 earnings forecast to reflect above-sector earnings growth.

Tencent, the world's No. 2 Internet company by market value, jumped 3.9 percent. The company is benefiting from online and mobile games advertising and a surge in U.S. technology stocks including Facebook Inc. yesterday is stimulating today's gains, said Ricky Lai, analyst at Guotai Junan International Holdings Ltd. NHN Corp., South Korea's biggest search-engine operator, surged 7.5 percent in Seoul, the largest gain in the MSCI Emerging Markets Index.

Largan Precision Co., a lens supplier for Apple Inc., surged 7 percent in Taipei after its second-quarter profit beat estimates and Barclays Bank Plc and JPMorgan Chase & Co. upgraded the stock.

China Stocks

The Shanghai Composite Index (SHCOMP) slipped 0.5 percent after China's government ordered cuts to production capacity in 19 industries, while technology companies extended a slump after reaching the highest valuations in more than two years.

The S&P BSE Sensex of Indian stocks declined 0.5 percent to a two-week low. Hindustan Unilever, the Indian unit of the world's second-biggest consumer-goods company, dropped to the lowest level since July 16. Sales volume rose 4 percent in the quarter ended June, compared with a 9 percent growth in the same period last year, the company said in a statement today.

The won increased 0.4 percent against the dollar, its third week of gains, after Bank of Korea Governor Kim Choong Soo said the economy is overcoming the impact of a weak yen. The Indian rupee was poised for a third weekly increase, the longest winning streak since February.

Hyundai Merchant Marine Co. (011200) tumbled 10 percent in Seoul, leading declines among companies that do business in North Korea. Talks between the two Koreas aimed at reopening the jointly-operated Gaeseong factory park broke down yesterday, with negotiators from both sides "pushing and shoving" and no agreement for dialogue to resume.

Turcas Drops

Turkey's stock gauge dropped 0.6 percent, its seventh day of declines, as energy group Turcas sank 2.6 percent. Turkey's Finance Ministry officials started a tax inspection at Shell & Turcas Petrol AS, in which Turcas has a 30 percent stake, according to a company statement.

The Philippine Stock Exchange Index (PCOMP) declined 0.5 percent while Taiwan's Taiex Index and the Jakarta Composite Index slid at least 0.2 percent. Trading volumes for benchmark gauges in Indonesia, Malaysia and China were at least 23 percent less than the 30-day average, data compiled by Bloomberg show.

The MSCI Emerging-Markets Index has lost 8.7 percent this year, while the MSCI World Index of developed-country stocks has gained 13 percent. The emerging-stocks measure trades at 10.1 times 12-month projected earnings, compared with the MSCI world's multiple of 13.9, data compiled by Bloomberg show.