Emerging Stocks Drop Fourth Day on Economy; Peru Shares Plunge
Emerging-market stocks dropped for a fourth day, the longest losing streak in three weeks, as concern deepened that the global economic expansion is slowing.
The MSCI Emerging Markets Index declined 0.6 percent to 1,149.00 at 4:31 p.m. in New York, with more than two stocks falling for every one that rose. Poland’s WIG20 Index fell 0.5 percent, dragged down by banking shares. Brazil’s Bovespa index tumbled the most in four months on concern slower global growth may damp demand for the country’s commodity exports. Peru’s benchmark index plunged 12 percent, the most in three decades, as investors speculated Ollanta Humala will seek more state control of the economy as the nation’s next president.
Developing-nation equities extended losses that were sparked by a U.S. report showing slower-than-estimated jobs growth in the world’s largest economy on June 3. A gauge of energy companies in the MSCI emerging-market index has been the worst performer among 10 industry groups in the past three months, falling 5.1 percent as crude prices slid from the highest level since September 2008.
“Market sentiment remains negative given the questionable outlook in the U.S.,” said Chandra Pasaribu, head of equity research at PT Danareksa Sekuritas in Jakarta. “As people take into account slower economic growth, commodity prices will likely stay on the weak side.”
The 21-country MSCI emerging-market gauge has fallen as reports showed manufacturing growth in the U.S. and China slowed in May. The measure has fallen 0.2 percent this year, compared with a 2.3 percent increase in the MSCI World (MXWO) Index of advanced- country shares. Exchanges in China, Hong Kong, Taiwan and South Korea were shut today for a holiday.
Peru Stocks, Bonds
Peru’s benchmark Lima General Index of stocks, which was started in 1981, tumbled 12 percent, the most on record. Mining companies led the measure lower after Humala, who during the presidential campaign pledged to raise royalties on the industry, claimed victory as initial results showed he won more votes than Congresswoman Keiko Fujimori in yesterday’s election.
Today’s trading suspensions were the first since the financial crisis of October 2008, the bourse said in an e-mailed statement that urged Peru’s presumed president elect to quickly name a cabinet so that investors can evaluate his economic team.
The extra yield investors demand to own Peru’s foreign- currency debt over U.S. Treasuries rose 18 basis points, or 0.18 percentage point, to 210, according to JPMorgan Chase & Co.’s EMBI Global Index.
“We don’t believe the market was fully positioned for a Humala victory, and we would expect Peruvian assets to come under pressure,” Brian Jackson, an emerging-market strategist at RBC Capital Markets in Hong Kong, wrote in an e-mailed note.
Peru’s financial assets may offer a buying opportunity if markets tumble after a victory by Humala, Ben Ramsey, an analyst at JPMorgan, wrote in a research note.
“Humala would be more moderate than expected if elected -- if anything because he can ill afford to see Peru’s growth collapse given his intention to fight poverty more aggressively,” Ramsey wrote.
Sixty-three stocks dropped on the Bovespa index while three rose. Oil companies Petroleo Brasileiro SA and OGX Petroleo & Gas Participacoes SA followed crude prices lower. Cia. Paranaense de Energia, known as Copel, led declines for utilities after the industry was cut to “in line” from “attractive” at Morgan Stanley.
Turkey’s lira weakened 0.9 percent, the most in two weeks, against the dollar and the benchmark two-year government bond yield rose six basis points to 8.94 percent. The country’s credit rating may have “downward pressure” if the current- account deficit becomes more difficult to finance, Moody’s Investors Service said in an e-mailed response to questions from Bloomberg News.
OAO Tatneft, the oil producer located in Russia’s Tatarstan region, slipped 1.8 percent. Oil dropped 1.2 percent to the lowest in two weeks of $99.01 a barrel in New York on signs of a slowdown in U.S. demand before the Organization of Petroleum Exporting Countries meets to decide production quotas.
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