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Emerging-Market Stocks Slide on Commodity Prices, Economy; Bonds Decline
Emerging-market stocks fell, extending the biggest monthly drop since May, as commodity prices declined and concern deepened the global economic recovery will falter.
The MSCI Emerging Markets Index lost 0.2 percent to 970.05. Benchmark indexes in Taiwan fell more than 1 percent as oil and copper prices fell. South Africa’s rand, South Korea’s won and Hungary’s forint dropped. Developing-nation bonds slipped for a sixth day, the longest losing streak since October, according to JPMorgan Chase & Co. EMBI+ indexes.
The MSCI index of 21 developing nations retreated 2.2 percent this month after the Federal Reserve said Aug. 10 the pace of the U.S. economic recovery will probably be “more modest” than forecast, Japan reported the slowest growth in exports this year and China’s industrial output cooled more than economists estimated.
“The concerns over the global economic recovery remain,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., an equities research provider in Mumbai.
The decline in equity markets left the MSCI gauge valued at 11.8 times reported earnings, compared with this year’s high of 13.7 times in January.
Bonds fell, sending the difference between the yield investors demand from emerging market sovereign bonds and U.S. Treasuries three basis points higher to 299, the most since July 22, according to JPMorgan indexes. The spread between Philippine bonds and Treasuries rose eight basis points.
Won, Forint
The Korean won lost 0.6 percent against the dollar. The Hungarian forint weakened 0.3 percent against the euro after a stronger Swiss franc fueled concern loan defaults may increase.
OAO GMK Norilsk Nickel, Russia’s largest mining company, fell 1.7 percent as copper for three-month delivery slipped 1.8 percent. OAO Rosneft, the country’s biggest oil producer, declined 0.1 percent, after oil slid 3.7 percent in New York to $71.92 a barrel.
Taiwanese stocks slipped 1.6 percent after Hon Hai Precision Industry Co., the world’s largest contract manufacturer of electronics, dropped 6.6 percent. The company, whose customers include Apple Inc., posted second-quarter net income of NT$16.7 billion ($521 million), according to Bloomberg calculations based on first-half data filed to the stock exchange yesterday. It was forecast to report profit of NT$19.4 billion, according to the average of 11 analyst estimates compiled by Bloomberg News.
To contact the reporters on this story: Jason Webb in London at jwebb25@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net.
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