Emerging-market stocks fell for a second day, pushing the benchmark index to its longest streak of weekly losses since May, as signs the global economy is slowing drove investor outflows from riskier assets.
The MSCI Emerging Markets Index slid 2.5 percent to 970.16 at 4:30 p.m. in New York, for its fourth straight week of losses. Brazil’s Bovespa slipped 1.3 percent while Colombia’s IGBC declined 0.8 percent. South Korea’s Kospi Index (KOSPI) sank 6.2 percent, the biggest drop since November 2008, while Taiwan’s Taiex index plunged 3.6 percent.
“There’s nowhere to hide as exposure is being taken off across most asset classes, driven by fears on developed-economy growth and liquidity fears in the European banking system,” said Gavin Parry, managing director at Parry International Trading Ltd. in Hong Kong.
Emerging-market equity funds posted $2.8 billion of outflows in the week ended Aug. 17, extending the biggest withdrawals since 2008 the previous week at $7.7 billion, Citigroup Inc. analysts led by Markus Rosgen said in a report today, citing figures by EPFR Global. Analysts at Morgan Stanley cut their forecasts for stock indexes in Southeast Asia, after economists from the brokerage lowered estimates for global economic growth.
The Federal Reserve Bank of Philadelphia’s general economic index plunged to minus 30.7 this month, the lowest since March 2009, from 3.2 in July. The August gauge exceeded the most pessimistic projection in a Bloomberg News survey in which the median estimate was 2.
“Heightening fears about the fate of the global economy after yesterday’s market sell-off and the very weak Philly Fed survey have seen a further sell-off in risk,” analysts at RBC Capital, including Robert Beange in London, wrote in an e-mailed note.
Equities worldwide have plunged in the past four weeks on concern the U.S. may enter a recession and as an intensifying European debt crisis evoked memories of late 2008, when credit markets froze after Lehman Brothers Holdings Inc. collapsed. Benchmark indexes in China, Taiwan and South Korea sank this month to levels that were more than 20 percent below their peaks, the level that signifies a bear market to some investors.
Brazil’s Bovespa posted its third week of losses in the past four. Banks led declines today, with Itau Unibanco Holding SA dropping 3.7 percent, after a government report showed that inflation surpassed 7 percent for the first time since 2005.
The Korean won depreciated 1.3 percent against the dollar. The lira dropped 0.1 percent on speculation that a global slowdown will prompt the central bank to cut interest rates next week.
Morgan Stanley cut its estimate for the MSCI Indonesia Index from a 13 percent advance by the year end to just 1 percent. The MSCI Thailand Index will advance 2 percent this year, less than an earlier target of 3 percent, the analysts said.
Indonesia’s Jakarta Composite index (JCI) retreated 4.4 percent and the SET Index slid 1.8 percent in Bangkok.
India’s Bombay Stock Exchange Sensitive Index lost 2 percent for the lowest close since May 2010.
South Korea’s exchange said it halted program trading of shares on the Kospi Index after futures tumbled. Program trading was stopped for five minutes from 1:03 p.m. local time after Kospi 200 futures fell more than 5 percent for more than a minute, Korea Exchange Inc. said today in a regulatory filing.
South Korea’s Financial Supervisory Service Governor Kwon Hyouk Se asked the nation’s insurance companies to expand capital on concern the recent market rout may deteriorate their finances.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell four basis points to 368, according to JPMorgan’s EMBI Global Index.
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