Most emerging-market stocks fell as weaker growth in Chinese manufacturing overshadowed monetary easing in Europe and the prospect of interest-rate cuts in India. Brazil’s Ibovespa (IBOV) dropped for the first time this week.
Lenovo Group Ltd. (992) slumped 2.7 percent in Hong Kong after talks to buy parts of International Business Machines Corp.’s server division broke down, according to a person familiar with the discussions. Hyundai Merchant Marine Co. sank to an eight- year low in Seoul. Indian (SENSEX) stocks jumped the most in Asia, while Turkey rallied to a record. Brazilian mining company Vale SA, whose biggest export market is China, slumped 2.7 percent.
The MSCI Emerging Markets Index dropped 0.1 percent to 1,037.33 in New York, as 428 equities fell while 355 rose. A private gauge of Chinese manufacturing declined last month, missing projections. The European Central Bank cut interest rates to a record low today, and the Reserve Bank of India will lower the repurchase rate for a third straight meeting, 33 of 40 analysts said in a Bloomberg survey.
“These shots of monetary easing are like shots of adrenaline that have less and less effect,” said Derrick Irwin, a portfolio manager of the Wells Fargo Advantage Emerging Markets Equity Fund, who helps manage $10.2 billion in Boston. “For China, expectations of a strong recovery have definitely been tempered. That has weighed on markets.”
Measures of commodity shares led losses in the emerging- market index. The broad gauge has lost 1.7 percent this year, compared with a 9.8 percent increase in the MSCI World Index of developed-country stocks. The emerging-markets measure trades at 10.8 times 12-month projected profit, compared with the MSCI World’s 14.2 times, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund gained 0.8 percent to $43.16. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, lost 4.8 percent to 19.29.
Brazil’s Ibovespa slumped for the first time in three days, falling 1.1 percent, as Vale retreated from a two-week high. Mexico’s IPC slid 0.4 percent.
Russia’s Micex Index fell 0.7 percent, resuming trade after yesterday’s holiday. OAO Bashneft, a Russian oil producer, plunged 10 percent after HSBC Holdings Plc downgraded the stock.
Markets in the Czech Republic, Poland and Hungary fell at least 0.2 percent, while Turkey’s Borsa Istanbul Stock Exchange National 100 Index jumped 3.1 percent. Migros Ticaret AS (MGROS) rose to a two-year high as Carrefour SA’s Turkish joint-venture partner said it’s considering buying the grocery chain.
Slovenia resumed its first international bond sale this year after Moody’s Investors Service cut its credit rating to junk as the euro member seeks to raise funds to rescue its troubled banks.
India’s S&P BSE Sensex index advanced 1.2 percent, its highest since Feb. 4. Tata Consultancy Services Ltd. (TCS) jumped 3.8 percent, while State Bank of India, the nation’s biggest lender, paced gains among its peers.
The Hang Seng China Enterprises Index (HSCEI) lost 0.9 percent, while the Shanghai Composite Index fell 0.2 percent in its first day of trading this week. Lenovo tumbled the most since April 18. China’s yuan rose to a 19-year high as the central bank raised the currency’s reference rate by the most in more than six months.
South Korea’s Kospi Index (KOSPI) slid 0.3 percent as Hyundai Merchant (011200) slumped 9.9 percent after saying that it will sell $117.6 million of bonds that are exchangeable into common shares of KB Financial Group Inc. LG Uplus Corp. (032640) rose the most on the emerging-market gauge, on speculation lower marketing costs will boost profit.
Indonesia’s stocks fell the most in about six weeks and bonds dropped after Standard & Poor’s cut its outlook on the rating for Southeast Asia’s biggest economy.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped three basis points, or 0.03 percentage point, to 280 basis points, according to JPMorgan’s EMBI Global Diversified Index.