Emerging-market stocks dropped for a fifth day, the longest declining streak in seven weeks, as losses at Chinese shipping companies and rising unemployment in Germany fueled concern that the economic slowdown is deepening.
The MSCI Emerging Markets Index (MXEF) fell 0.9 percent to 944.39, the lowest level since July 27. China Shipping Container Lines Co. tumbled 11 percent, the most in the MSCI index. (VXEEM) OAO Mosenergo, the Moscow-based power generator controlled by OAO Gazprom, slumped 2.3 percent. Brazil’s Bovespa stock index slid for a second day, with state electricity utility company Cia. Energetica de Sao Paulo among the biggest losers.
Almost 60 percent of companies in the Shanghai Composite Index (SHCOMP) that reported second-quarter results so far have trailed analysts’ estimates, eroding investor confidence in the world’s second-biggest economy. German unemployment increased for a fifth straight month in August, while South Korean manufacturers’ confidence stayed near the lowest since 2009, data showed today. More Americans than forecast filed applications for unemployment benefits last week, according to another report.
“Economic data is going to be weak for a while and it’s not something very surprising,” Gaelle Blanchard, an emerging- markets strategist at Societe Generale SA, said by phone from London. “If we have positive steps that the market expects from the Federal Reserve and the European Central Bank, it could lead to a new wave of market optimism.”
The MSCI emerging-market gauge has declined 0.9 percent in August, after rising during the previous two months. The 21- country gauge is up 3.1 percent this year, compared with a 7.6 percent gain in the MSCI World Index of developed-nation shares.
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, fell 1.2 percent to the lowest in four weeks. The Chicago Board Options Exchange Emerging Markets ETF (EEM) Volatility Index, a measure of options prices on the fund and expectations of price swings, jumped 3.8 percent.
The Bovespa dropped 0.2 percent, with Cia. Energetica declining 6.1 percent to the lowest since May 29. Cia. de Transmissao de Energia Eletrica Paulista, or CTEEP, which transmits electrical power, fell 7.3 percent.
Brazil’s central bank reduced its benchmark interest rate late yesterday by 0.5 percentage point to a record 7.5 percent, as forecast by all 60 economists surveyed by Bloomberg.
U.S. jobless claims were little changed at 374,000 in the week ended Aug. 25, matching the upwardly revised figure from the prior week, the Labor Department reported today in Washington. The median forecast of 50 economists surveyed by Bloomberg News called for 370,000.
Federal Reserve Chairman Ben Bernanke is scheduled to speak tomorrow in Jackson Hole, Wyoming, where he may discuss the economic outlook. Countries in the MSCI emerging-market index send about 13 percent of their exports to the U.S. on average, data compiled by the World Trade Organization show.
The extra yield investors demand to own emerging-market bonds over U.S. Treasuries climbed 1 basis point, or 0.01 percentage point, to 318, according to JPMorgan Chase & Co.’s EMBI Global Index.
China Cosco, the nation’s largest listed shipping firm, said its dry-bulk and container units both posted larger losses than a year earlier. CSCL’s first-half loss doubled.
Agricultural Bank of China Ltd. (601288), the nation’s third-largest lender by market value, dropped 2.7 percent after posting second-quarter profit that trailed analysts’ estimates. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, said after the close of trading in Shanghai that earnings grew at the weakest pace in three years.
The Philippine peso climbed 0.2 percent against the dollar, snapping a three-day decline, after second-quarter economic growth beat economists’ forecasts. Gross domestic product expanded 5.9 percent from a year earlier, compared with the 5.5 percent median estimate in a Bloomberg News survey. The ruble dropped 1.1 percent against the dollar to the weakest level in four weeks.