Emerging market share sales beat developed nations for first time

NEW YORK: Emerging markets are attracting more money from share offerings than industrialised nations this quarter for the first time in at least a decade as companies in and China complete record sales.

Companies from Petroleo Brasileiro to in the MSCI Emerging Markets Index’s 21 countries raised $138 billion through initial public offerings and additional sales this quarter, beating the $62 billion in industrialised countries, data compiled by Bloomberg show.

, who oversees about $34 billion as executive chairman of , says that last week’s record offering from Brazil’s signals that emerging market share sales may be approaching a “bubble.” For bulls from Huntington Asset Advisors to Thornburg Investment Management, faster profit growth and economies that are forecast to expand twice as much as industrialized nations mean that stocks in developing countries are still a buy.

“The emerging markets are going to be the best place to be,” said Paul Attwood, who helps oversee $13.3 billion at Huntington in Cincinnati. “Although emerging markets are starting to get to a point where the valuations are not as attractive, the growth is going to be there. That plays into healthy IPO markets.”

2007 Peak

Equity sales in developing nations this quarter exceeded the previous high of $72 billion in the last three months of 2007, data compiled by Bloomberg show. Beijing-based PetroChina, the country’s biggest oil company, completed the largest offering of that quarter on the day MSCI’s emerging market gauge peaked, raising $8.9 billion in Shanghai on Oct. 29, 2007.

The MSCI Emerging Markets Index traded at 18 times the earnings of its companies as PetroChina sold its shares, the highest level in five years, data compiled by Bloomberg show. The next day the gauge began a 12-month, 66% plunge as a freeze in credit markets spurred the worst financial crisis since the Great Depression.

For Templeton’s Mobius, the ability of Petrobras to raise as much as $70 billion last week to develop offshore fields signalled that emerging market stocks may again be approaching levels of excessive valuations. Brazil’s state-controlled oil producer sold 2.4 billion common shares for 29.65 reais each and 1.87 billion preferred shares at 26.30 reais apiece on Sept. 23 in the world’s biggest equity sale on record.