Emerging-market stocks posted the largest weekly loss since November, as Chinese and Indian production data and a $2 billion JPMorgan Chase & Co. trading loss spurred concern global growth will falter.
The MSCI Emerging Markets Index lost 1 percent to 971.01 at the close in New York to push its weakly retreat to 4.1 percent, the most since the week ended Nov. 25. Energy, industrial and information technology companies led decliners for the five days as China Shipping Container Lines Co Ltd. (2866) plunged 20 percent. OAO MRSK Holding, the Russian state-run power distributor, slid for a sixth week. Brazil’s Bovespa (IBOV) retreated 2.3 percent.
Chinese industrial output increased 9.3 percent in April from a year earlier, lower than the 12.2 percent median estimate of 32 economists surveyed by Bloomberg. In India, production declined 3.5 percent from a year earlier, less than the 1.7 percent gain projected by analysts in a Bloomberg survey. The U.S. producer price index dropped 0.2 percent in April, the first decline in four months. JPMorgan said “egregious mistakes” and “sloppiness” caused losses for the firm.
“It’s been a rough month and a half for emerging-market equities and a lot of that has to do with continued concerns out of Europe and slower-paced economic data out of the U.S. and the emerging-market world,” Tim Hall, who manages about $700 million at Deltec Asset Management, said by phone from New York. “Then you have the JPMorgan incident and that’s a wet rag on an already pessimistic market.”
The ‘Worst Flows’
The developing-nations gauge declined for an eighth straight week to its longest weekly losing streak since 2008. The MSCI Emerging Markets Index has fallen 10 percent from this year’s March 2 high.
The index trades at 10.2 times estimated earnings and has added 6 percent this year, compared with the 12.1 multiple for the MSCI World Index of advanced nations, which has added 5.1 percent in 2012.
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF tracking developing-nation shares, fell 3.4 percent during the week to $39.97.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, gained 9.4 percent to 29.11.
Emerging-market equity funds posted outflows of $1.1 billion in the week ended May 9 on renewed concerns about Europe and Chinese growth, Citigroup Inc. analysts led by Markus Rosgen wrote in a report today, citing data compiled by EPFR Global. The “worst flows” were from the Central and Eastern Europe, Middle East and Africa region, while Asia ex-Japan had outflows of $81 million.
Brazil’s Bovespa benchmark gauge fell for a third week. Cyrela Brazil Realty SA Empreendimentos e Participacoes retreated 5.3 percent and was among leading decliners for the week.
MRSK Holding fell 9.2 percent in Moscow following an Interfax report that it may be transferred under the management of Federal Grid Co., which dropped 8.9 percent. Energy Ministry spokesman Dmitry Klokov did not immediately return calls seeking comment, while MRSK’s press service didn’t respond to an e-mailed request.
Russia’s Micex Index (INDEXCF) grew 0.4 percent, its first five-day gain in three weeks. OAO Novatek, Russia’s second-biggest natural-gas producer, reported first-quarter profit increased 13 percent as output and the price of the fuel rose. Shares of the company grew 4.9 percent in the past week, and was among leading stocks in the Micex Index.
Agora SA, Poland’s largest publicly-traded publisher, reported a net loss in the first quarter. The company’s shares retreated 2.8 percent for the week. The WIG20 Index (WIG20) fell 1.4 percent to a second weekly decline.
The FTSE/JSE Africa All Share Index fell 0.3 percent as Anglo American Plc (AGL), a diversified mining company, fell 0.9 percent. BHP Billiton (BIL), the world’s biggest resources company, dropped 0.3 percent. South Africa’s rand retreated 3.3 percent against the dollar.
“Industrial production for emerging nations is declining faster than expected amid the slackening global demand environment,” Aneesh Srivastava, who oversees about $470 million as chief investment officer at IDBI Federal Life Insurance Co. in Mumbai, said by phone.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose 15 basis points, or 0.15 percentage points, to 361, according to JPMorgan Chase & Co.’s EMBI Global Index.