Emerging-market stocks fell to a two-month low after the U.S. added fewer jobs than forecast in March and as quickening Chinese inflation curbs speculation that policy makers will use monetary policy to boost growth.
The MSCI Emerging Markets Index (MXEF) fell for a fourth day, losing 1 percent to 1,026.29 at the close in New York, its lowest closing level since Jan. 31. Industrial and information technology companies had the biggest drop. HTC Corp. (2498), Asia’s second-largest smartphone maker, led declines among emerging- market technology companies after posting its steepest profit drop since listing a decade ago. Gerdau SA (GGBR4), Latin America’s largest steelmaker, slipped to a two-month low.
Employers in the U.S. added 120,000 jobs in March, the fewest in five months and less than the median economist forecast in a Bloomberg survey, the Labor Department reported on April 6. Chinese consumer prices rose 3.6 percent last month from a year earlier, the National Bureau of Statistics said on its website today. That was more than the median estimate of 3.4 percent in a Bloomberg survey of 33 economists.
“The data continues to bear out our view that emerging market economic growth will continue to disappoint expectations and this will continue to weigh on emerging-market asset performance through the first half,” Nick Chamie, the head of emerging markets at RBC Capital Markets in Toronto, said by phone. “We would expect that there would be further downside momentum and upward pressure on volatility in the weeks to come.”
The MSCI Emerging Markets Index has gained 12 percent this year, while the MSCI World Index (MXWO) of developed nations added 8.3 percent. Companies on the gauge of developing nations are valued at 10.7 times estimated profit, compared with the MSCI World’s multiple of 12.5 times.
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF to track developing-nation shares, fell 1.5 percent to $42.11 in New York. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, rose 6.2 percent to 27.96, the highest level in a month.
The Bovespa (IBOV) tumbled 1.2 percent to the lowest since Jan. 30. Gerdau lost 1.5 percent and rival steelmaker Usinas Siderurgicas de Minas Gerais SA fell 1.3 percent. Gerdau obtained 38 percent of its revenue from North America last year.
Lupatech SA (LUPA3), Brazil’s biggest oil-services company, jumped 11 percent, the biggest one-day gain since Feb. 17, after saying that top shareholders will inject at least 350 million reais ($193 million) of fresh capital.
China Vanke Falls
The Shanghai Composite Index (SHCOMP) retreated 0.9 percent. China Vanke Co. (200002), the nation’s biggest listed property developer, dropped 1 percent and Poly Real Estate Group, the second- biggest, fell 0.6 percent.
South Korea’s Kospi Index (KOSPI) slid 1.6 percent, the steepest decline since Dec. 19. North Korea is preparing for an underground nuclear test to follow a long-range rocket launch scheduled for as early as this week, according to a report compiled by South Korean intelligence officials.
Taiwan’s Taiex Index (TWSE) slipped 1.4 percent after the government said it will formulate a proposal for a capital-gains tax on stock transactions this week.
HTC dropped 6.8 percent to the lowest close since Feb. 7, after reporting that first-quarter net income tumbled 70 percent from a year earlier to NT$4.46 billion ($151 million). The average of 17 analyst estimates compiled by Bloomberg was for profit of NT$4.62 billion.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries increased 10 basis points, or 0.10 percentage point, to 359 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.