Emerging Stocks Fall to 4-Month Low on Europe Concerns
Emerging-market stocks slid, pushing the benchmark index to a four-month low, as industrial equities tumbled on concern political gridlock will derail Europe’s debt crisis recovery, crimping demand for riskier assets.
The MSCI Emerging Markets Index (MXEF) lost 1.5 percent to 977.90 at the end of trading in New York, the lowest close since Jan. 17. Brazilian crude producer OGX Petroleo & Gas Participacoes SA dropped the most in two weeks, as oil declined for a sixth day. China Shipping Container Lines Co. (2866), the nation’s second-biggest cargo-box carrier, plunged the most in seven months on concerns Europe’s economic recovery may wane.
Leaders in debt-stricken Greece are struggling to form a new government after May 6 elections where voters flocked to anti-bailout parties. China’s Shanghai Composite Index (SHCOMP) sank the most in six weeks today, while Brazil’s Bovespa (IBOV) Index dropped for a second day to the weakest level since Jan. 13, based on closing prices. The Standard & Poor’s GSCI Spot Index of commodities slipped to the lowest this year.
“Whether we like it or not, emerging markets remain a play on risk appetite,” Jose Morales, who oversees $1.6 billion in emerging market equities at Mirae Asset Global Investment in New York, said in a phone interview. “At the moment, risk appetite is declining because of the concerns coming out of Europe.”
China Shipping tumbled 9.1 percent while OGX Petroleo lost 2.7 percent as the Shanghai Composite Index fell 1.7 percent and Brazil’s Bovespa index slipped 1 percent. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong lost 1.6 percent to its lowest since Jan. 9. The MSCI Emerging Markets Industrials Index led declines among sectors on the broad market, falling 2.5 percent.
South Korea’s Kospi Index (KOSPI) fell 0.9 percent to its lowest since Jan. 30 as Korea Zinc Co. (010130) Ltd., which also manufactures gold and silver, tumbled the most since Dec. 15. Gold futures for June delivery fell 0.9 percent on the Comex. Korea Zinc Co., the world’s third-biggest producer of refined zinc, tumbled 8.7 percent in Seoul after metal futures dropped. Russian markets were closed for a holiday.
Crude for June delivery fell 0.2 percent to $96.81 a barrel on the New York Mercantile Exchange. The Standard & Poor’s GSCI Total Return Index of commodities dropped for a sixth day, slipping 0.1 percent to 4,869.5.
The MSCI Emerging Markets Index has gained 6.7 percent this year, while the MSCI World Index (MXWO) of developed nations added 4.9 percent. The gauge of developing nations is valued at 10.3 times estimated profit, compared with the MSCI World’s multiple of 12.1 times.
E Ink Holdings Inc. (8069), a maker of liquid crystal displays, slumped 6.8 percent in Taipei to its lowest close since May 13, 2009. The company will implement two days of leave without pay in May and June and cut executive salaries by as much as 20 percent, it said in a stock-exchange filing. Taiwan’s Taiex Index retreated 0.9 percent.
Daewoo Shipbuilding & Marine Engineering Co. (042660) Ltd., the third-largest shipbuilder, sank 6.1 percent, leading declines among South Korean shipyards on speculation Europe’s debt crisis and a drop in oil prices may weaken demand for offshore equipment and vessels. The stock slipped the most since Dec. 15. Samsung Heavy Industries Co., Ltd. dropped 5.8 percent.
“If we’re going into a more deflationary period because of Europe, that’s not good for commodities or even gold, which in turn isn’t good for emerging markets,” Nelson Saiers, who oversees $639 million at Alphabet Management LLC in New York, including Chinese stocks, said in a phone interview.
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