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Most Emerging Stocks Fall as China Slump Outweighs Brazil

Most emerging-market stocks fell as declines in China outweighed a rally in Latin American shares. Brazil’s Ibovespa advanced for a fourth day.

Samsung Electronics Co., which has the biggest weight in the gauge of developing nations, dropped 1.3 percent in Seoul, while Cosco Pacific Ltd. (1199), the container-terminal arm of China’s largest shipping group, retreated 3 percent in Hong Kong. Braskem SA, Latin America’s largest petrochemicals producer, rallied the most in more than three years after Brazil announced tax credits for the chemical industry.

The MSCI Emerging Markets Index (MXEF) slid 0.2 percent to 1,009.81 in New York as 437 stocks fell, while 313 gained. China’s manufacturing is expanding at a slower pace this month on weakness in global and domestic demand, fueling concern that the world’s second-biggest economy is faltering. Euro-area services and manufacturing output contracted for a 15th month in April, a survey by Markit Economics also showed.

“People are worried about a downturn in global manufacturing,” Jan Dehn, the co-head of research at Ashmore Investment Management Ltd. in London, which oversees about $71 billion, said by e-mail. “They are risk averse. They sell emerging markets out of a knee-jerk reaction.”

Technology shares led the declines in the MSCI Emerging Markets Index among 10 industries. The gauge has fallen 4.3 percent this year, compared with a 7.9 percent jump in the MSCI World Index (MXWO) of developed countries. The developing-markets measure trades at 10.6 times 12-month projected profit, compared with the MSCI World (MXWO)’s 14 valuation, according to data compiled by Bloomberg.

Emerging ETF

Stocks pared losses as a report showed that purchases of new U.S. homes rose in March, capping the best quarter for the industry since 2008. The iShares MSCI Emerging Markets Index exchange-traded fund rose 0.5 percent to $42.04. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, lost 4.4 percent to 18.82.

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The emerging-markets gauge briefly extended its decline in the afternoon when a posting on the Associated Press Twitter account said there had been explosions at the White House and PresidentBarack Obama had been injured. The gauge recovered from the slump within minutes as the news service said its Twitter account had been hacked and there were no explosions.

The Ibovespa advanced 1.1 percent as BlackRock Inc. said Brazilian stocks are cheap after recent losses pushed the valuation for the equity gauge to the lowest in more than six months. Braskem climbed 8.3 percent. Mexico’s IPC Index gained 0.5 percent.

Poland, Russia

Poland’s WIG20 Index lost 0.2 percent as KGHM Polska Miedz SA, Poland’s sole copper and silver producer, tumbled 3.2 percent after UBS AG downgraded the stock on falling commodity prices. The Standard & Poor’s GSCI gauge of 24 commodities dropped for the first time in four days.

Russian stocks erased losses as OAO RusHydro gained 4.5 percent. Hungary’s forint weakened a fifth day as the central bank lowered its benchmark interest rate to a record as new President Gyorgy Matolcsy seeks to help the economy emerge from a recession with inflation near a 39-year low.

South Africa’s FTSE/JSE Africa All Share Index rose 1.5 percent, as Cie. Financiere Richemont SA, the maker of Cartier jewelry and IWC watches, advanced 7.1 percent in Johannesburg. The company said full-year net income rose about 30 percent, more than analysts expected.

Chinese Stocks

The Hang Seng China Enterprises Index (HSCEI) slumped 1.6 percent, while the Shanghai Composite Index tumbled 2.6 percent. South Korea’s Kospi Index dropped for the first time in three days. Samsung Electronics led losses in the emerging-market gauge by index points. TPK Holding Co. (3673), which supplies to Apple Inc., tumbled 5.8 percent in Taipei.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese stocks in the U.S. added 0.5 percent, rising a fourth day. New Oriental Education & Technology Group Inc. and Baidu Inc. climbed on speculation investors are favoring companies dependent on consumer demand.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell three basis points, or 0.03 percentage point, to 294 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net; Maria Levitov in London at mlevitov@bloomberg.net

To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net; Emma O’Brien at eobrien6@bloomberg.net

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