Emerging-market stocks fell, spurring the biggest decline in the benchmark index (VXEEM) in over a week, as commodities fell and as European leaders said Spain isn’t on the verge of asking for a rescue.
The MSCI Emerging Markets Index (MXEF) lost 1.1 percent to 997.93 at the close of trading in New York, slipping for the first time in three days. The BSE India Sensitive Index sank the most since July 26 while the Shanghai Composite Index (SHCOMP) slid 0.6 percent as China’s markets re-opened after a week-long break. Brazil’s Bovespa Index rose 1.3 percent with Vale SA (VALE3), the world’s largest producer of iron ore, gaining the most since Sept. 10.
European finance ministers set up a full-time 500 billion- euro ($648 billion) fund to aid debt-swamped countries while saying that Spain, its biggest potential near-term customer, isn’t on the verge of tapping it. Decisions were put off on Greece’s next aid payment and on an assistance program for Cyprus. German Chancellor Angela Merkel visits Greece tomorrow for the first time since the crisis erupted.
The 21 nations in MSCI’s developing-nations gauge send about 30 percent of their exports to the European Union on average, according to data compiled by the World Trade Organization. Crude and copper fell amid speculation the region’s slowdown will curb demand.
“Markets are very nervous regarding the growth outlook and they are waiting on any information from the political sphere as a driver,” Michael Ganske, head of emerging-market research at Commerzbank AG, said by phone from London.
EM ETF Sinks
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, slid 0.9 percent. 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 2.9 percent.
The Bovespa rose the most in three weeks. Amil Participacoes SA (AMIL3), Brazil’s largest managed-health provider, surged 15 percent to its highest level. UnitedHealth Group Inc. (UNH), the biggest U.S. health insurance company, agreed to pay about $4.9 billion to buy 90 percent of Amil, valuing the Brazilian company 50 percent more than its price a month ago. Vale gained 2.9 percent. Competitor MMX Mineracao e Metalicos gained 6.7 percent, the most since July 27.
The Sensex declined 1.2 percent and India’s S&P CNX Nifty Index dropped 1.2 percent. The rupee sank 1.5 percent to 52.6450 per dollar in Mumbai, the biggest drop since Dec. 12. Erroneous trades sent the gauge down as much as 16 percent on Oct. 5, briefly erasing $58 billion in value.
The Hang Seng China Enterprises Index (HSCEI) fell 1.3 percent and Taiwan’s Taiex Index slid 1 percent. Vietnam’s VN Index rose 1.4 percent, the most in Asia.
Zijin Mining Group Co. (2899) had its steepest loss in more than two months in Hong Kong as gold and copper prices slid. Hon Hai Precision Industry Co. (2317) sank to a one-month low in Taipei after parent Foxconn Technology Group stopped production as workers protested. Posco (005490), Asia’s third-biggest steelmaker by output, dropped 1.9 percent in Seoul after SK Telecom Co. cut its stake.
South Africa’s rand was the second-worst performer among all the emerging-market currencies tracked by Bloomberg as strikes in the country’s mining and transportation industries spread to other parts of the economy.
Aquarius Platinum Ltd. (AQP) declined 7.2 percent, the most in three months, in Johannesburg as Chief Executive Officer Stuart Murray quit after a spate of strikes in South Africa.
All 10 industry groups declined in the MSCI emerging- markets index today. The broader measure has climbed 8.9 percent this year, trailing a 12 percent increase in the MSCI World Index of developed countries.
Zijin Mining, China’s biggest gold producer, sank 4.6 percent as gold dropped for a second day. Copper fell to the lowest level in more than a week as further signs of a slowdown in China spurred concern that demand growth will weaken in the world’s biggest user.
Hon Hai lost 1.9 percent. Foxconn Technology, the assembler of Apple Inc. iPhones, had to stop production for the second time in as many weeks after a protest by factory-line workers at one of its plants in Zhengzhou, China.
Posco fell the most since Aug. 30. SK Telecom sold a 1.4 percent stake in Posco at 353,100 won a share, SK Telecom spokeswoman Irene Kim said by phone.
The Shanghai Composite has fallen 5.7 percent this year on concern the government isn’t loosening monetary policy or introducing stimulus policies fast enough to counter the slowdown in the economy.
DLF Ltd. (DLFU), India’s biggest developer, fell 7.3 percent in Mumbai. Anti-corruption activists on Oct. 5 accused Robert Vadra, the son-in-law of the Congress Party president Sonia Gandhi, of being involved in “illegal land deals” with DLF. DLF said on Oct. 6 the allegations are “completely baseless and untrue.”
The extra yield investors demand to own emerging-market dollar bonds over U.S. Treasuries was unchanged at 287 basis points, according to JPMorgan’s EMBI Global Index.
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