Emerging Stocks Drop to Two-Week Low on China Exports, Europe

Emerging-market stocks fell, driving the benchmark index to a two-week low, after China’s exports grew at the weakest pace in two years and Italian bond yields traded near 7 percent, fueling concern Europe’s debt crisis is worsening.

The MSCI Emerging Markets Index sank for a second day, losing 2.7 percent to 953.95 at 4:56 p.m. in New York, the lowest since Oct. 24. The gauge pared declines of as much as 3.2 percent after the European Central Bank was said to have bought Italian debt. Brazil’s Bovespa fell 0.4 percent as speculation faded that Brazil’s central bank will step up the pace of interest-rate cuts. South Korea’s Kospi Index (KOSPI) fell 4.9 percent. The Hong Kong-traded Hang Seng China Enterprises Index sank 5.7 percent after Chinese export growth slowed in October.

Italy sold 5 billion euros ($6.8 billion) of one-year bills at an average yield of 6.087 percent after yields yesterday on 10-year notes surged past the level at which Greece, Ireland and Portugal sought international bailouts. Efforts to speed the setup of a permanent rescue fund for heavily indebted European nations have lost momentum as Germany and France clashed over provisions to force bondholders to share losses, three people involved in the negotiations said.

“There is no real structure in place to come to an easy resolution, there is so much politics going on,” Tim Hall, who helps manage about $750 million at Deltec Asset Management in New York, said in a phone interview. “There needs to be a more wholesale reform.”

China Exports

China’s export growth of 15.9 percent last month was less than the 16.1 percent median estimate among economists surveyed by Bloomberg. Imports climbed 28.7 percent, leaving a trade surplus of $17 billion, the customs bureau said on its website. Export growth to the European Union slowed to 7.5 percent.

Industrial & Commercial Bank of China (601398) Ltd., the world’s largest bank by market value, fell 8.7 percent in Hong Kong trading, the most since October 2008, to HK$4.74. Goldman Sachs Group Inc. sold 1.75 billion ICBC shares at HK$4.88, two people with knowledge of the matter said, asking not to be identified. The amount sold is smaller than the 2.4 billion shares Goldman Sachs offered, and the sale was priced at the low end of the HK$4.88 to HK$5 offering range, according to a term sheet obtained by Bloomberg News.

Lojas Americanas SA (LAME4), Brazil’s second-largest retailer by market value, rose 1.1 percent, its biggest advance in two weeks. Petroleo Brasileiro SA (PETR4) followed crude prices higher.

The WIG20 Index fell 1.2 percent in Warsaw. The FTSE/JSE Africa All Share Index gained 0.6 percent, after earlier losing as much as 0.8 percent.

Currencies

The Korean won depreciated 1.5 percent against the dollar and the Indonesian rupiah weakened by 1.2 percent. Brazil’s real gained 1 percent as did the South African rand.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 11 basis points, or 0.11 percentage point, to 392, according to JPMorgan Chase & Co. (JPM)’s EMBI Global Index.

The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps rose four basis points to 307, according to data provider CMA.

To contact the reporters on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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