Emerging-market stocks fell, with the benchmark index (VXEEM) posting its first weekly decline in five, as concern that a slowdown in corporate sales growth outweighed signs that the U.S. economy is improving.
The MSCI Emerging Markets Index lost 0.5 percent to 971.05, extending its weekly slide to 0.8 percent. Brazil’s Bovespa index retreated for the first time in three days, with airline Gol Linhas Aereas Inteligentes SA leading the decline. South Korea’s Kospi index slid 0.6 percent, dragged down by a slump in Samsung Electronics Co., the nation’s largest exporter. Russia’s Micex index and South Africa’s FTSE/JSE Africa All Share Index (JALSH) dropped 0.5 percent.
Revenue growth in emerging markets has fallen to 8.5 percent for companies reporting from May 16 to Aug. 15 from 9.6 percent in the first quarter, according to data compiled by Bloomberg. Taiwan cut its growth forecast for 2012, putting pressure on policy makers to support growth. The index of U.S. leading economic indicators climbed more than forecast in July, a sign of sustained expansion in the world’s largest economy.
“There’s been disappointment in growth in some of the biggest emerging economies,” Gavin Redknap, an emerging markets strategist at Nikko Asset Management, said by phone from London today. “But we have seen policy responses in a number of places and that will be good cyclically for the global economy going forward.”
EM ETF Retreats
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares, fell 0.5 percent. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, declined 3.8 percent to 20.79, the lowest in four months.
The Bovespa fell 0.6 percent, with Gol losing 4.5 percent. CCR SA, a Brazilian toll road operator, dropped 4.4 percent.
The Conference Board’s index of the outlook for the next three to six months increased 0.4 percent after a revised 0.4 percent drop in June, the New York-based group said today. Economists projected the gauge would rise by 0.2 percent, according to the median estimate in a Bloomberg survey. Germany signaled its support for a European Central Bank plan to resolve the debt crisis.
The MSCI Emerging Markets Index (MXEF) has gained 6 percent this year, compared with a 9.1 percent increase in the MSCI World Index. The emerging-markets measure trades at 10.8 times estimated earnings, compared with 13.1 for the developed-nations measure, data compiled by Bloomberg show.
South Africa’s benchmark index declined the most since July 31 and the rand tumbled 1.6 percent against the dollar, the worst performer out of 25 emerging market currencies tracked by Bloomberg. Police killed 34 striking workers at Lonmin Plc’s Marikana platinum-mining complex yesterday, the worst death toll in police action since the end of apartheid in 1994.
The BSE India Sensitive Index increased 0.2 percent. The benchmark gauge posted its third consecutive week of advances, as foreign investors increased the holdings of the nation’s shares. The Shanghai Composite Index rose 0.1 percent.
Samsung Electronics dropped 3.7 percent in Seoul, the biggest drag on the MSCI Emerging Markets Index. Samsung, a key supplier and competitor of Apple, had rallied 23 percent from July 12 through yesterday. Samsung rested its case in a patent- infringement trial after putting on witnesses who said Apple would owe the Suwon, South Korea-based company as much as $421.8 million in royalties. Apple sued Samsung in April 2011, accusing it of copying patented designs for mobile devices such as iPhones, and the South Korean company countersued.
Radiant Opto-Electronics Corp. (6176), a Taiwanese liquid-crystal display products maker, dropped 4.6 percent after BNP Paribas SA said earnings may have peaked. BNP expects weak second-half sales and margins on cautious demand for Apple products. Growth for the company may slow to single digits in 2013 and onward, the brokerage said. Radiant dropped the most this month in Taipei.
China Resources Enterprise Ltd. (291), the government-backed partner of SABMiller Plc., rallied 11 percent after first-half profit surged 37 percent and it named a new chief executive officer.
The extra yield investors demand to own emerging-market bonds over U.S. Treasuries increased 1 basis point, or 0.01 percentage point, to 314, according to JPMorgan Chase & Co.’s EMBI Global Index.