Emerging-market stocks declined the most in three weeks on signs the global economic slowdown is worsening as orders for capital goods in the U.S. slipped and HSBC Holdings Plc cut its 2012 growth forecast for China.
The MSCI Emerging Markets Index (VXEEM) slid 0.9 percent, the biggest slump since Aug. 2, to 965.47. Steelmakers Usinas Siderurgicas de Minas Gerais SA and Cia. Siderurgica Nacional SA led decliners on Brazil’s Bovespa stock index. Gauges in China and South Korea slumped more than 1 percent. Pegatron Corp. (4938) fell to a one-month low in Taipei, the most on the MSCI index, after saying it expects computer shipments to fall.
Demand for U.S. capital goods such as machinery and communications gear dropped in July by the most since November, indicating companies are pulling back on investment. Fed Chairman Ben S. Bernanke may clarify the central bank’s thinking in an Aug. 31 speech. HSBC reduced its 2012 gross domestic product growth forecast for China to 8 percent from 8.4 percent in a report.
“The market mood is linked to growth concerns in a highly volatile environment as sentiment has been hovering between hope and disappointment,” Mohamed Saidi, a Brussels-based fund manager at Dexia Asset Management, which oversees about $860 million of equity assets in developing nations, said by phone. “It is clear that the U.S. data is going to hurt the optimism of investors. The worsening global growth requires stronger policy response and all we are seeing are useless meetings and declarations and no real action.”
EM ETF Slumps
German Chancellor Angela Merkel and French President Francois Hollande meet with Greece’s prime minister today and tomorrow to discuss the pace of reform. The 21 nations in MSCI’s developing-nations gauge send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show.
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM) tracking developing-nation shares was little changed at 40.05. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, declined 0.7 percent.
The Bovespa Index dropped 0.1 percent, paring an early loss of as much as 1.2 percent. Usiminas, as the Belo Horizonte, Brazil-based company is known, lost 3.3 percent. Cia. Siderurgica Nacional lost 5.5 percent.
Bookings for non-military capital equipment excluding planes slumped 3.4 percent, a Commerce Department report showed today in Washington. Such bookings are considered a proxy for future business investment in items such as computers, engines and communications gear.
China, South Korea
The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong lost 1.6 percent. The Shanghai Composite Index sank 1 percent to its lowest close since March 2009. South Korea’s Kospi Index retreated 1.2 percent.
Pegatron plunged 6.9 percent in Taipei. Shipments of notebook and netbook computers in the third quarter may fall 15 percent to 20 percent versus the previous three months, the company said in a statement on its website.
China National Building Material Co. lost 4.6 percent, the most since June 28. The company said first-half net income fell 47 percent to 1.9 billion yuan ($299 million). SM Investments declined 5.2 percent, the biggest slump since April 3, in Manila on plans to sell $150 million of shares to institutional investors.
In Seoul, Samsung Electronics Co. (005930) lost 0.9 percent after a court in the city ruled the company and Apple Inc. had infringed on each other’s patents and must stop selling some mobile devices in South Korea. Korea Gas Corp. slumped 5.6 percent, the most since May 18 after Samsung Securities Co. downgraded the stock to hold from buy.
Vietnam’s VN Index gained 1.8 percent. The gauge plunged 10 percent the previous three days after the arrest of a banking tycoon sparked concerns over the country’s financial system. The slump dragged the gauge’s price-estimated earnings ratio to a three-month low.
The MSCI Emerging Markets Index (MXEF) has increased 5.4 percent this year, compared with an 8.7 percent gain by the MSCI World Index of developed nations. The gauge of developing nations trades at 10.4 times estimated profit, compared with the MSCI World’s multiple of 13, data compiled by Bloomberg show.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 2 basis points, or 0.02 percentage point, to 316, according to JPMorgan Chase & Co.’s EMBI Global Index.