Most Emerging Stocks Drop as Commodity Producers Tumble

Most emerging stocks fell, capping a second weekly drop, as a slump in commodities sank producers from OAO Gazprom to Vale SA. Hungary’s benchmark index jumped to a three-month high as the nation published its budget plans.

Gazprom, Russia’s state-controlled natural gas producer, retreated 1.5 percent, while iron-ore producer Vale slumped for a third day. Anadolu Efes Biracilik & Malt Sanayii AS, Turkey’s biggest brewer, tumbled 7.6 percent after the nation’s parliament approved a law banning retail alcohol sales at night and promotion of alcoholic drinks. OTP Bank Nyrt. paced gains in Hungary and the forint extended its advance.

The MSCI Emerging Markets Index rose less than 0.1 percent to 1,026.68 as 375 stocks fell, while 326 rose. The measure dropped 1.8 percent for the week. The S&P GSCI Index of commodities slid a fourth day as signs of a rebounding U.S. economy revived concern that the Federal Reserve will scale back asset purchases. Chinese manufacturing contracted for the first time in seven months, data showed this week.

“The general concern is that we start to see a bit of a pullback from what the Fed’s been doing,” Sean Lynch, the Omaha, Nebraska-based global investment strategist for Wells Fargo Private Bank, said by phone. His firm oversees about $170 billion. “The two big things to worry about in emerging markets are rising rates in the U.S. and a China slowdown, and we saw a little bit of that this week.”

Four out of 10 groups in the developing-nation measure fell as consumer staple and raw-material shares had the biggest losses. The broad index has dropped 2.7 percent this year, compared with an 12 percent jump in the MSCI World Index.

Emerging ETF

The iShares MSCI Emerging Markets Index exchange-traded fund retreated 0.9 percent to $42.27. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, surged 5.2 percent to 21.47.

Brazil’s Ibovespa rose 0.1 percent, extending its weekly advance to 2.3 percent. Vale retreated 0.8 percent, while Brookfield Incorporacoes SA paced gains among homebuilders. The Mexican IPC index rose less than 0.1 percent today, trimming its biggest weekly loss since March.

Russian equities fell a second week as oil, the nation’s main exporter, retreated on signs of a global economic slowdown. Gazprom dropped to a one-month low.

The Borsa Istanbul Stock Exchange National 100 Index slid a second day after reaching a record on May 22. Anadolu Efes (AEFES) sank the most since September 2011. Otokar Otomotiv ve Savunma Sanayi AS, a Turkish producer of civilian and military vehicles, rose to an all-time high after Hurriyet Daily News reported the company could sell tanks to Saudi Arabia.

Poland, Hungary

The Budapest Stock Exchange Index rose as OTP Bank Nyrt., Hungary’s largest lender jumped to the highest price since Aug. 2011. Poland’s benchmark index added 1.1 percent.

The Hang Seng China Enterprises Index of mainland companies dropped to a one-month low, while the Shanghai Composite Index added 0.6 percent. India’s S&P BSE Sensex (SENSEX) swung between gains and losses at least 20 times before closing 0.2 percent higher. Tata Steel Ltd. (TATA) climbed 4.5 percent after yesterday reporting a lower-than-estimated quarterly loss.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 278 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.

To contact Bloomberg News staff for this story: Julia Leite in New York at jleite3@bloomberg.net; Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editors responsible for this story: Laura Zelenko at lzelenko@bloomberg.net; Gavin Serkin at gserkin@bloomberg.net

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