Emerging-market stocks dropped for the first time in three days on expectations higher oil prices will hurt earnings of airlines, while display-panel makers sank on concern global shipments are falling. Korean Air Lines Co. (003490), the nation’s biggest carrier, dropped 6.4 percent after Deutsche Bank AG recommended selling the stock and oil prices traded near a nine-month high. AU Optronics Corp. (2409) fell to a one-month low after a brokerage said Taiwanese television-panels shipments slid. Hon Hai (2317) Precision Industry Co. lost 2.9 percent in Taipei as a board member filed to sell a stake in the company. China Telecom Corp. climbed 3.6 percent in Hong Kong, pacing gains among phone stocks. The MSCI Emerging Markets Index lost 0.2 percent to 1,064.67 as of 4:11 p.m. Hong Kong time. The gauge pared an earlier drop of 0.7 percent amid progress in the euro region, where leaders reached an agreement for a second Greek bailout package. The Philippine Stock Exchange Index fell 0.9 percent, while Taiwan’s Taiex index lost 0.4 percent. “Emerging markets have done very well this year and gone too fast in a short period,� Ang Kok Heng, who oversees about $397 million as chief investment officer at Phillip Capital Management Sdn., said in a telephone interview from Kuala Lumpur today. “Even when there is good news from Europe, it’s already factored in.� The MSCI Emerging Markets Index (MXEF) has gained 16 percent this year, while the MSCI World Index (MXWO) of developed nations added 9.5 percent. The gauge of developing nations is valued at 10.7 times estimated profit, compared with the MSCI World’s multiple of 12.9 times. Greek Aid Debt-laden Greece secured a second bailout after European finance ministers awarded the nation 130 billion euros ($173 billion) in aid by tapping into European Central Bank’s profits and persuaded investors into providing more debt relief to prevent a precedent-setting default. In Seoul, Korean Air sank the most since Dec. 19 while Asiana Airlines Inc. (020560) lost 4.4 percent on concern fuel prices will increase. Oil futures in New York traded at $104.93, near the highest intraday level since May 5. Kingfisher Airlines Ltd., unprofitable for more than 10 quarters, slumped 7.9 percent in Mumbai after its accounts were frozen by tax authorities. AU Optronics fell 4.5 percent, while Chimei Innolux Corp. (3481) decreased 4.7 percent to its lowest close since Feb. 2. The companies are Taiwan’s largest flat-panel makers. Panel shipments fell 21 percent in January from a month earlier, larger than the 7.7 percent decline for the global market, Jih Sun Securities Ltd. said in a note. Policy Measures Hon Hai had the biggest decline since Dec. 15 after Lu Sung-Ching, a board member, filed to sell 950,000 shares, according to an exchange statement yesterday. The stock was cut to “neutral� from “overweight� at HSBC Holdings Plc. In China, the Shanghai Composite Index (SHCOMP) gained 0.8 percent, reversing losses of as much as 0.8 percent, on speculation the government will adopt more measures to boost liquidity. Industrial & Commercial Bank of China (601398) Ltd. gained 1.4 percent after money-market rates declined. A gauge of phone stocks in the MSCI Emerging Markets Index rose 0.3 percent, the most among 10 industry groups. China Telecom climbed the most since Aug. 25 after saying it will become the nation’s second wireless operator to offer Apple Inc.’s iPhone 4S. The BSE India Sensitive Index (SENSEX), or Sensex, rose 0.6 percent, set to close at the highest level since July 27. Bharat Heavy Electricals Ltd. (BHEL), the country’s biggest producer of power equipment, advanced 4 percent to a three-month high after Power Secretary P. Uma Shankar said the government is likely to approve a proposal to levy a 19 percent import tax. To contact the reporter on this story: Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net To contact the editor responsible for this story: Darren Boey in Hong Kong at dboey@bloomberg.net

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