Emerging market stocks fell from a two-week high, led by consumer discretionary and industrial companies, as Chinese data dimmed the nation’s economic outlook and tensions on the Korean peninsula escalated.
OGX Petroleo & Gas Participacoes SA, the company owned by Brazilian billionaire Eike Batista, slumped 15 percent after an unexpected drop in offshore oil production. The won weakened to a one-month low against the dollar as North Korea threatened to target the South Korean nominee for defense minister. Central European Distribution Corp. (CEDC), a Polish vodka distiller, surged 13 percent in New York after announcing a new debt swap offer. Brazil’s real depreciated as the central bank intervened.
The MSCI Emerging Markets Index declined 0.2 percent to 1,063.56 in New York as 449 stocks fell while 318 rose. China’s industrial output had the weakest start to a year since 2009 and lending and retail sales growth slowed. Tensions on the Korean peninsula are at the highest since at least 2010, when 50 South Koreans were killed in attacks by the North.
“China is the key growth engine for the region,” Jeff Papp, senior analyst at Lisle, Illinois-based Oberweis Asset Management Inc., said in a telephone interview. His firm oversees $700 million. “It’s showing more signs of slowing, so any companies from anywhere else that play into those trends may see some weakness.”
Emerging stocks also fell after French industrial production dropped more than expected in January as Europe’s second-largest economy teetered on the brink of its third recession in four years. Fitch cut Italy’s debt rating after the close of equity markets on March 8 as European Union leaders prepared for a March 14-15 summit to discuss financial-rescue terms for Cyprus.
Nine out of 10 groups in the MSCI Emerging Markets Index (MXEF) dropped as measures of consumer discretionary and industrial shares slid at least 0.6 percent. The broader measure has risen 0.8 percent this year, trailing a 7.2 percent gain in the MSCI World Index (MXWO) of developed-country stocks. The emerging-markets index trades at 11.1 times 12-month projected profits, compared with the MSCI World’s 14.2 times, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets exchange-traded fund, the ETF tracking developing-nation shares, dropped for the first time in five days, decreasing 0.5 percent. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a gauge of options prices on the fund and expectations of price swings, rose 0.9 percent to 15.40, snapping a four-day slump.
Brazil’s Bovespa (IBOV) rose 0.2 percent. Cia. Energetica de Sao Paulo, the nation’s second-largest power generator by capacity, rose to a one-month high as Credit Suisse Group AG recommended buying the stock, citing rule changes that are expected to boost cash flow. OGX tumbled to the lowest since 2008.
The country’s real depreciated 0.7 percent against the dollar after the central bank sold $1 billion of reverse foreign-exchange swaps to weaken the currency.
The Mexican IPC index declined 0.7 percent. The nation’s biggest homebuilders tumbled for a third day after meetings with investors in New York and London failed to quash concern that the companies will struggle to finance themselves amid increased costs. Urbi Desarrollos Urbanos SAB sank 4 percent to a record- low, while Desarrolladora Homex SAB lost 1.3 percent.
Russia’s Micex Index added 0.9 percent. OAO Gazprom, the world’s biggest natural gas producer, rose 2.2 percent, its first advance in three days. Russian markets were closed for a holiday March 8.
Poland’s WIG20 Index fell 0.5 percent. CEDC surged as much as 37 percent in New York. Eurocash SA (EUR), Poland’s biggest distributor of non-durable consumer goods, gained 1.4 percent. Eurocash will replace TVN SA in Warsaw’s WIG20 Index of the biggest and most liquid stocks after market close on March 15, the bourse said in a statement on Feb. 7.
Hungary’s forint lost as much as 1.4 percent and traded 0.8 percent lower at 301.82 per euro on concern central bank President Gyorgy Matolcsy is concentrating power in a bid to reshape monetary policy making.
The Shanghai Composite Index dropped 0.4 percent, its third day of declines. The Jakarta Composite index fell 0.4 percent from a record. Thailand’s SET Index rose 0.7 percent to its highest close since January 1994, after the nation’s credit rating was raised to BBB+ by Fitch Ratings. South Korea’s Kospi (KOSPI) index lost 0.1 percent.
The Kenyan shilling strengthened 0.9 percent versus the dollar after peaceful presidential elections in East Africa’s biggest economy. Kenya held its presidential vote on March 4, where Uhuru Kenyatta, who is preparing for trial at the International Criminal Court, won by 50.07 percent of the ballots cast, the Independent Electoral and Boundaries Commission said on March 9.
The extra yield investors demand to own emerging-market bonds over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 278, according to JPMorgan Chase’s EMBI Global Index.