Emerging-market stocks fell for a ninth week, the longest string of weekly declines since 1994, as Citigroup Inc. cut its estimate for the gauge and oil dropped to a six-month low.
The MSCI Emerging Markets Index sank 1.5 percent to 906.61 by 4:32 p.m. in New York, increasing its loss on the week to 6.6 percent, the most in eight months. The gauge erased its annual gain as Europe’s debt crisis worsened. The MSCI Bric Index fell for a ninth week as Russia’s Micex retreated to a seven-month low and the ruble weakened 0.7 percent, dropping 11 days in the longest run of losses since January 2009. Brazil’s Bovespa snapped an eight-day decline on LLX Logistica SA’s 4.4 percent jump.
Citigroup reduced its year-end estimate for the MSCI gauge of 21 developing nations to 1,100 from 1,225, citing concern Greece will exit the euro and China’s economy will slow further, Geoffrey Dennis, the brokerage’s global emerging-market strategist in New York, wrote in a report yesterday. Crude oil fell 1.2 percent to $91.48 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 26.
“Oil is clearly the challenge right now,” Simon Quijano-Evans, chief emerging-market economist at ING Groep NV, said by phone from London today. “The global situation is driving oil prices down and that has really bad implications for importers and producers in the emerging markets.”
The MSCI BRIC Index dropped 0.7 percent, extending its loss for a ninth week, the longest string of declines since Sept. 21, 2001. An MSCI gauge tracking technology companies sank 3.7 percent, the most among the developing-nation index’s 10 industries.
The MSCI Emerging Markets gauge’s 14-day relative strength index, which tracks momentum by comparing closing prices with daily trading ranges, fell to 13.9 today. A reading of 30 or below is a signal some investors use to indicate prices may be about to rise.
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF tracking developing-nation shares, fell 1 percent to $37.29. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 3.5 percent to 37.42.
“We do not expect significant outperformance by emerging market equities in the near term,” Citigroup’s Dennis said in the report. “Prolonged summer doldrums, even further near-term weakness, seem likely before a rally later in the year.”
Moody’s Investors Service lowered debt ratings at 16 Spanish banks yesterday, citing the recession and mounting loan losses, and Greece’s credit rating was reduced one level by Fitch Ratings on concern the country may not be able to sustain membership in the euro area.
Russia Falls on Oil
The benchmark gauge in Russia slid 1.3 percent, increasing its weekly retreat to 8.7 percent, the most since Sept. 25. Mosenergo OAO fell 6.7 percent to lead declines on the gauge.
Brazil’s Bovespa added 0.8 percent, after an eight-day strong of declines. LLX Logistica surged after the company said it’s in “preliminary negotiations” for new letting contracts in the Superporto do Acu.
Turkey’s ISE National 100 Index dropped 0.7 percent. Anadolu Cam Sanayii AS (ANACM), a Turkish glassmaker, slumped 3.1 percent to a four-month low after first-quarter profit missed analysts’ estimates. Hungary’s BUX jumped 1.2 percent.
In South Africa, the FTSE/JSE Africa All Share Index (JALSH) slid 1.2 percent, the lowest in four months. Palabora Mining Co., a copper miner, fell 5.2 percent to the lowest price this year.
Chinese home prices fell in 46 of 70 cities in April, a record high, the National Bureau of Statistics reported today.
The Shanghai Composite Index (SHCOMP) slipped 1.4 percent while the Hang Seng China Enterprise Index fell 1.3 percent to the lowest level since November.
Guangzhou R&F Properties Co. (2777) led a decline by Chinese developers, sliding 5.9 percent. Samsung Electronics Co. (005930), which gets 40 percent of sales from Europe and America, slid 4.7 percent on concern overseas demand will slow.
Anta Sports Products Ltd., (2020) a Chinese sportswear maker, tumbled 9.2 percent in Hong Kong to the lowest close in more than three years after saying that intensifying competition has been affecting the company’s profitability over the past several quarters.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose two basis points, or 0.02 percentage point, to 406, according to JPMorgan Chase & Co.’s EMBI Global Index.