Emerging-market equities slumped to the lowest level in more than three months, with Korean and Taiwanese stocks leading declines, as French and Greek voters rejected pro-austerity parties and oil slipped to a 2012 low.
The MSCI Emerging Markets Index (MXEF) lost 1.1 percent to 1,001.85 by 5:46 p.m. in New York, the weakest since Jan. 25. Industrial and information technology companies drove declines as Samsung Heavy Industries Co. (010140) fell the most since November. South Korea’s Kospi Index and Taiwan’s Taiex slid more than 1.6 percent. Brazil’s Bovespa Index (IBOV) advanced for the first time in three days as Hypermarcas SA (HYPE3) jumped in Sao Paulo.
Socialist candidate Francois Hollande defeated President Nicolas Sarkozy in French elections, while Greece’s political leaders struggled to form a coalition government after voters flocked to anti-bailout parties. Crude oil sank to as three- month low of $97.94 a barrel, pushing the Standard & Poor’s GSCI Spot Index of commodities down for a fourth day on concern a slowing global economy will hit resource demand.
“Emerging market weakness is carrying over from last week because euro zone debt concerns and slow growth recession concerns are still floating around,” Win Thin, global head of emerging markets strategy at Brown Brothers Harriman & Co., said by phone in New York today. “The soft data is not good for risk assets.”
The MSCI developing nations gauge had its seventh weekly drop last week, its longest run of declines since 2008, paring its yearly advance to 9.3 percent. The index is valued at 10.4 times estimated earnings of member companies, compared with the MSCI World Index’s (MXWO) valuation of 12.2 times. The developed market measure has added 6.6 percent this year, according to data compiled by Bloomberg.
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF tracking developing-nation shares, rose 0.4 percent to $41.51 today, the biggest jump since May 1.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, rose 0.3 percent to 26.68, the highest level since April 23.
Hollande, the first Socialist in 17 years to control Europe’s second-biggest economy, has called for policies German Chancellor Angela Merkel opposes, including increased spending and a delayed deficit-reduction effort for euro region nations. In Greece, New Democracy and the socialist Pasok party, who were rivals until the country’s debt crisis pushed them into a national government, didn’t win enough seats to form a parliamentary majority.
The Bovespa rose 0.7 percent as Hypermarcas, a Brazilian maker of more than 190 consumer products, climbed 5.8 percent, the most since March 13. The Sao Paulo-based company reported today that profit grew 24 percent in the first quarter on rising pharmaceutical sales.
Vanguarda Agro SA (VAGR3), a Brazilian agricultural company backed by Spanish billionaire Enrique Banuelos, added 5.6 percent, the most since February. It was the second-biggest gainer on the Bovespa.
Samsung Heavy, a South Korean shipyard, declined 6.4 percent, the most since Nov. 10, in Seoul. The Kospi slipped 1.6 percent.
The Taiex Index (TWSE) tumbled 2.1 percent. Taiwan Semiconductor Manufacturing Co. slid 2.3 percent and Cathay Financial Holding Co., the country’s largest financial services company, retreated 2.7 percent.
Industrial & Commercial Bank of China suspended a 15 percent discount on mortgage for first-time home buyers nationwide, the official Xinhua News Agency reported on May 5. China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of China Ltd. all retreated at least 1.5 percent after Religare Capital Markets said that other banks may follow ICBC.
Payrolls in the U.S. rose by 115,000 in April, falling short of the median economist estimate for a 160,000 advance, U.S. Labor Department figures showed on May 4.
The U.S. jobs data and the results of the French presidential election are sending “jitters through the Asian markets today,” Vasu Menon, vice president for wealth management at Oversea-Chinese Banking Corp. in Singapore, told Bloomberg Television. “If the market pulls back another 5 percent, 8 percent, you will see bargain hunters coming back to bargain hunt for stocks because the fundamentals for Asia are still fairly strong.
China’s exports to Taiwan dropped 8.6 percent to $7.37 billion in the first three months of the year, according to the Commerce. Ministry The country’s consumer-price index rose 1.4 percent in April from a year ago, compared with a revised 1.25 percent increase in March, the statistics bureau said in Taipei today. The median of 12 estimates in a Bloomberg survey of economists was for a 1.4 percent gain.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 345 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
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