Emerging-market stocks fell for a fifth day, the longest losing streak since August, on concern a U.S. political impasse on the nation’s debt and the European crisis will threaten the global economic recovery.
The MSCI Emerging Markets Index retreated 2.6 percent to 909.84 at 4:30 p.m. in New York, its lowest close since Oct. 20. Brazil’s Bovespa index declined 0.8 percent and Chile’s benchmark fell 1.9 percent. The Micex Index slid 4.8 percent in Moscow, the most since Oct. 4. Taiwan’s Taiex Index and the BSE India Sensitive Index each slumped 2.6 percent.
The deficit-cutting U.S. congressional supercommittee has failed to reach agreement on at least $1.2 trillion in federal budget savings, setting the stage for automatic cuts in 2013 and fueling concern that economic-stimulus measures that are set to expire will not be renewed. In Spain, Mariano Rajoy won the biggest parliamentary majority in an election in almost 30 years, and told Spaniards to brace for difficult times as the nation fights to avoid being overwhelmed by the European debt crisis.
“Emerging markets have been hit across the board,” said Neil Shearing, a London-based senior emerging-markets analyst at Capital Economics Ltd. “The U.S. just added one more factor into the mix, in the sense that it supports the feeling that problems particularly in the developed world are going to get a lot worse before they get any better.”
Emerging-market currencies weakened. The Mexican peso depreciated 2.1 percent against the dollar and the Indian rupee lost 1.6 percent. The rand fell 1.7 percent and the ruble dropped 1 percent.
Brazil’s Bovespa stock index dropped to the lowest level in a month as concern that economic growth will slow pulled down consumer and financial stocks.
MRV Engenharia e Participacoes SA, Brazil’s fifth-biggest homebuilder, fell 2.1 percent in Sao Paulo as O Estado de Sao Paulo cited Deputy Finance Minister Nelson Barbosa as saying the government may reduce its forecast for economic growth this year to 3.5 percent from 3.8 percent. BM&FBovespa SA (BVMF3), the operator of Latin America’s biggest securities exchange, slid 4.4 percent, the second-worst performance on the gauge, after Direct Edge Holdings said in a statement it plans to start an electronic platform to trade Brazilian equities.
Developers paced losses in Hong Kong after Xinhua News Agency said the government may not lift property curbs until the third quarter. China State Construction International Holdings Ltd. (3311) tumbled 9 percent and Longfor Properties Co. Ltd. sank 5.4 percent.
Poland, South Africa
KGHM Polska Miedz SA (KGH), Poland’s sole copper and silver producer, slumped as much as 11 percent on a government plan to increase taxes on natural resource extraction. The WIG20 Index fell 2.6 percent in Warsaw.
The FTSE/JSE Africa All Share Index fell 2.2 percent in South Africa.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose seven basis points, or 0.07 percentage point, to 422, 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 31 basis points to 361, according to data provider CMA.
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