Emerging-market stocks fell for a fifth day, the longest losing 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) declined 0.7 percent to 945.89 at 9:10 a.m. in New York, heading for the lowest level on a closing basis since Aug. 2. China Shipping Container Lines Co. tumbled 11 percent, the most in the MSCI index, and China Cosco Holdings Co. (1919) retreated 3.5 percent. OAO Transneft (TRNFP), a Russian oil pipeline operator, sank to a four-week low after posting a 23 percent drop in earnings. The South African rand, Czech koruna and Hungarian forint led declines in emerging-market currencies.
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. U.S. consumer spending rose for the first time in three months in July, dimming speculation that Federal Reserve Chairman Ben S. Bernanke will announce more stimulus steps tomorrow in Wyoming.
“Chinese earnings are falling and there is excess inventory and capacity in the country’s economy, which is fueling fears that growth will slow more than expected,” said Attila Vajda, Ho Chi Minh City-based analyst at ACB Securities. “The Fed might not directly announce anything new.”
The Shanghai Composite slipped less than 0.1 percent to the lowest level since February 2009, as almost three stocks dropped for every one that rose. Brazil’s Bovespa also lost less than 0.1 percent, while Russia’s Micex Index slid 0.2 percent. Indonesia’s Jakarta Composite Index tumbled 1.7 percent for the biggest decline among developing-nation equity indexes tracked by Bloomberg.
The MSCI emerging-market gauge has declined 0.7 percent in August, after rising 4.5 percent during the previous two months. The 21-country gauge is up 3.3 percent this year, compared with an 8.3 percent gain in the MSCI World Index of developed-nation shares.
Chinese shipping companies led an MSCI Inc. gauge of emerging-market industrial stocks to a 1.2 percent drop, the biggest decline among 10 sectors. 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.
Transneft dropped 0.3 percent in Moscow. OAO Rosneft, Russia’s largest oil producer, slipped 0.5 percent as oil retreated for a second day in New York.
The ruble dropped 0.3 percent against the dollar to the weakest level in almost four weeks, while South Africa’s rand declined 0.7 percent. The koruna and the forint both fell 0.6 percent versus the euro.
Brazil’s real weakened 0.3 percent against the dollar. The 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.
The Philippine peso climbed 0.2 percent, snapping a three- day decline, after second-quarter economic growth beat economists’ forecasts. Gross domestic product increased 5.9 percent from a year earlier, compared with the 5.5 percent median estimate in a Bloomberg News survey.
Asustek Computer Inc. (2357) surged 6.9 percent, the most since May, after the Taipei-based company reported second-quarter earnings that topped analysts’ estimates.
The Markit iTraxx SovX CEEMEA Index of east European, Middle Eastern and African credit-default swaps rose three basis points, or 0.03 percentage point, to 240. The extra yield investors demand to own emerging-market bonds over U.S. Treasuries rose three basis points to 319, according to JPMorgan Chase & Co.’s EMBI Global Index.
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