Emerging-market stocks plunged the most since July, led by commodity producers, after China’s economic growth unexpectedly slowed.
OAO Gazprom, Russia’s biggest natural-gas producer, slumped to a four-year low, and Harmony Gold Mining Co. (HAR) tumbled to the lowest price since 2005 in Johannesburg as oil and metal prices declined. Brazil’s Bovespa index dropped the most since September 2011, led by iron-ore producer Vale SA. Venezuela’s sovereign bonds retreated the most in two months after Nicolas Maduro won emergency presidential elections.
The MSCI Emerging Markets Index sank 1.6 percent to 1,003.29, the most since July 23. Government data today showed Chinese gross domestic product expanded 7.7 percent in the first quarter from a year earlier, less than the 8 percent median forecast in a Bloomberg survey of 41 economists. March industrial production also increased less than estimated.
“Now that the Chinese numbers start to disappoint, investors see more evidence of faltering global growth,” Maarten-Jan Bakkum, an emerging-market strategist at ING Investment Management in the Hague, said by e-mail. “This is not good for the commodity markets for sure.”
Gauges of energy and raw-materials companies fell at least 2.5 percent, the most among 10 industry groups in the MSCI Emerging Markets Index. (MXEF) The Standard & Poor’s GSCI index of 24 raw materials fell 2.3 percent. Oil dropped below $90 a barrel, gold sank the most since 1980 and silver reached a two-year low.
The MSCI Emerging Markets Index has lost 4.9 percent this year, compared with a 6.9 percent rally in the MSCI World Index (MXWO) of developed countries. The emerging-markets index trades at 10.5 times projected 12-month profits, compared with the MSCI World’s 13.8, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund declined 2.4 percent to $40.86 in New York, the steepest one-day slump since July 23. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, surged 23 percent to 22.
Brazil’s Bovespa fell 3.7 percent. Vale dropped 6.5 percent, contributing most to the decline in the MSCI Emerging Markets Index. Lender Banco do Brasil SA dropped 1.8 percent after Brazil’s securities regulator suspended the $6.2 billion initial public offering of its insurance unit for 30 days.
The Mexican IPC Index (MEXBOL) slumped 2.3 percent. Desarrolladora Homex SAB shares plunged 18 percent to a record low after the homebuilder said it’s evaluating options including selling debt and assets to increase cash. Peru’s benchmark stock index tumbled 4.1 percent today, the most since September 2011.
The cost of insuring Venezuela’s debt against default increased and bonds fell after Maduro, ex-President Hugo Chavez’s handpicked successor, won emergency elections over opposition candidate Henrique Capriles. Capriles claimed voter fraud and said he wouldn’t accept the results until electoral officials carried out a vote recount. Interior Minister Nestor Reverol told reporters the country’s military is dispatching tanks and anti-riot forces in Caracas.
Russian shares fell to the lowest level since June as the Micex Index sank 1.9 percent. Gazprom slid 1.3 percent, while OAO Mechel sank 5.3 percent after Russia’s biggest coking coal producer reported a 2012 net loss.
South Africa’s rand had the biggest decline against the dollar among emerging-market currencies. Harmony Gold lost 8.9 percent in Johannesburg.
The Shanghai Composite Index lost 1.1 percent, taking its drop from a Feb. 6 high to 10 percent. Construction machinery maker Zoomlion Heavy Industry Science and Technology Co. slumped to a 15-month low after forecasting lower profit. The Hang Seng China Enterprises Index slid 2 percent.
South Korea’s won rose the most in more than two months after the U.S. agreed to work with China, Japan and South Korea to try and draw North Korea back into nuclear talks.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose two basis points, or 0.02 percentage point, to 287 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.