Emerging-market stocks retreated to a two-week low as concern China’s economy is contributing to a global slowdown deters investors from riskier assets.
The MSCI Emerging Markets Index (MXEF) fell 0.2 percent to 1047.62 in New York, the lowest level since March 7, as 410 stocks dropped while 314 gained. Raw materials producers and industrial companies led the decline, while telecommunications companies advanced.
Steelmaker Cia. Siderurgica Nacional SA (CSNA3) lost the most in three months, dragging Brazil’s Bovespa (IBOV) lower for a second day. OAO GMK Norilsk Nickel (GMKN), Russia’s biggest mining company, slid to the lowest level in two months on concern nickel prices may extend declines. The Hang Seng China Enterprises Index (HSCEI) slumped for a sixth day.
Prices for metals and raw materials have fallen as declining Chinese retail sales and home prices add to signs that the world’s second-largest economy is slowing. Premier Wen Jiabao cut the economic growth target for this year to the lowest since 2004 on March 5.
“People are increasingly nervous about what may happen in China,” John-Paul Smith, a London-based emerging-market strategist at Deutsche Bank AG, said by phone. “My own big fear is that even though over the medium and long-term a restructuring of the Chinese economy is what’s needed to avoid a hard landing, in the near term you’re likely to see lower growth rates.”
Emerging equities trade at 10.7 times estimated earnings, after rallying 14 percent this year. That compares with a valuation of 13.1 for the MSCI World Index (MXWO) of developed-nation shares, which is up 11 percent in 2012. The valuation gap was the widest since February 2009 over the past two days, data compiled by Bloomberg show.
The iShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF that tracks developing-nation shares, added 0.2 percent to $43.24 today, gaining for the first time in four days.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, lost 2.5 percent to 24.50 by 5 p.m. in New York.
Brazil’s Bovespa slumped 0.6 percent to the lowest level in 1 1/2 weeks, as Cia. Siderurgica Nacional lost 3.7 percent after being downgraded to underweight from equal-weight by Barclays Plc. Steelmaker Usinas Siderurgicas de Minas Gerais SA slid 4 percent.
Brazilian telephone companies advanced, led by Tele Norte Leste Participacoes SA (TNLP4)’s 5.1 percent climb.
Mexican stocks rose 1 percent on the IPC Index, as retail sales increased 4.4 percent in January from the same month last year. The median estimate of 17 analysts surveyed by Bloomberg was for a 4 percent jump.
China Oilfield Services Ltd. (601808) dropped the most in three months in Shanghai as profit missed analysts’ estimates. China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the biggest Hong Kong-listed shipbuilder, slid 8.1 percent in Hong Kong after second-half profit dropped 59 percent.
China Oilfield (2883), the drilling unit of the nation’s largest offshore oil producer, lost 3.2 percent. Net income fell to 4.04 billion yuan last year, based on international accounting standards, the company said in a statement. This compares with an average of 4.2 billion yuan based on 10 analyst estimates compiled by Bloomberg.
South Africa’s stock market was closed for a holiday.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose five basis points, or 0.05 percentage point, to 324 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.