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Emerging-Market Stocks Fall for First Time in Nine Days, Paring July Gain
Emerging-market stocks fell for the first time in nine days on renewed concern that slowing global economic growth will reduce earnings.
The MSCI Emerging Markets Index declined 0.2 percent to 991.41 at 5 p.m. in New York. The 21-country gauge pared its weekly gain to 1 percent and its monthly advance to 8 percent. Benchmark equity gauges in Turkey and Indonesia slipped from record highs today, while Russia’s Micex Index tumbled the most in a month.
China’s Shanghai Composite Index slipped 0.4 percent, paring its biggest monthly advance in a year to 10 percent. India’s Bombay Stock Exchange Sensitive Index declined 0.7 percent.
Growth in the U.S. slowed to a 2.4 percent annual rate in the second quarter, reflecting a larger trade deficit and an easing in consumer spending. The increase in gross domestic product compared with a median forecast of 2.6 percent of economists surveyed by Bloomberg News.
Samsung Electronics Co. sank 2.1 percent in South Korea after saying it will be a “challenge” to sustain current profitability. Indonesia’s Jakarta Composite Index slipped 0.9 percent after reports showed Japan’s factory output unexpectedly dropped in June while unemployment rose, heightening concern regional demand may fall.
Bovespa Rallies
“This month’s rebound by stocks is running ahead of economic fundamentals,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “Disappointing earnings figures from some companies may lead to weak expectations about the second half of the year.”
Russia’s Micex stock index fell 1.5 percent, the most since July 1, after the central bank kept its key rates unchanged.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries widened five basis points to 2.86 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index.
Brazil’s Bovespa stock index climbed for a 10th day, the longest winning streak since August 2003. Lojas Renner SA led gains after Brazil’s biggest publicly traded clothing retailer posted a profit of 91 million reais ($51.8 million) in the second quarter, up 90 percent from a year earlier.
Emerging-market equity and bond fund inflows rose in the week ended July 28 as European bank stress tests and U.S. earnings reports boosted investor optimism, EPFR Global said in a statement. Asia ex-Japan emerging-market equity funds received more than $1 billion, the strongest inflows in 14 weeks, EPFR said. Global emerging-market equity and developing-nation bond funds attracted more than $1 billion, the research firm said.
--Chua Kong Ho and Zhang Shidong in Shanghai, Michael Patterson in London and Tal Barak Harif and Veronica Navarro Espinosa in New York. With assistance by Chen Shiyin in Singapore. Editors: John Kohut, Stephen Kirkland.
To contact the reporter on this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net
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