Emerging-market stocks fell to a six-week low as Turkey’s shares tumbled amid protests against the government and concern grew the global economy will falter. South Africa’s rand rebounded from the lowest level since 2009.
The Borsa Istanbul Stock Exchange National 100 Index posted the biggest slump in a decade as Turkiye Garanti Bankasi AS (GARAN) and Akbank TAS sank at least 9.4 percent, while Turkish bond yields surged the most on record. Russia’s dollar-denominated index plunged as much as 20 percent from this year’s high as OAO Mechel (MTLR) slid. Brazil’s Ibovespa rose from a six-week low as Vale SA led Brazilian raw-material producers higher.
The MSCI Emerging Markets Index slid 1 percent to 998.55, the lowest level since April 18. The gauged dropped a fourth day. Clashes in Istanbul began May 31, with protesters calling for Prime Minister Recep Tayyip Erdogan to resign. Manufacturing in the U.S. unexpectedly contracted, while Federal Reserve Bank of San Francisco President John Williams said bond purchases may be reduced in the next three months.
“You’re starting to see some risks come back,” Sameer Samana, the St. Louis-based international strategist at Wells Fargo Advisors LLC, said by phone. His firm oversees about $1.3 trillion. “You almost need a person whose full time job is to analyze Fed comment, but the economy is going to be more important than opinions.” The Turkish turmoil “shows some of the risks in emerging markets,” he said.
All 10 groups in the measure of developing-nation stocks retreated, as consumer-staple shares had the biggest loss. The broad gauge extended this year’s decline to 5.4 percent, compared with a 10 percent jump in the MSCI World Index.
The iShares MSCI Emerging Markets Index exchange-traded fund added 1.5 percent to $41.81. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slid 3.8 percent to 22.79.
Brazil’s Ibovespa gained 0.8 percent, rebounding from earlier losses, as Vale SA, the world’s largest iron-ore producer, rose the most since April 3. The nation’s swap rates climbed to their highest level in a year after the central bank unexpectedly stepped up the pace of increases in borrowing costs last week to control inflation. The real advanced for the first time in six days.
Turkish stocks plunged 10 percent, leading losses among major emerging-market indexes. Turkiye Garanti posted the biggest slump in more than nine years, while Akbank TAS (AKBNK) fell the most since 2008. Bond yields surged 71 basis points, or 0.71 percentage point, to 6.78 percent at the close in Istanbul.
Russia’s RTS Index fell as much as 2.1 percent before trading down 0.9 percent, a 19 percent drop from this year’s high on Jan. 28. The ruble-based Micex Index slipped 0.9 percent as Mechel, a coking coal producer and steelmaker, lost as much as 8.3 percent after a report signaled the nation’s manufacturing sector is slowing for the third straight month.
South Africa’s rand strengthened the most since June 29 after plunging 11 percent last month. The currency of Africa’s largest economy tumbled to a four-year low on May 31 amid concern union talks scheduled to start this month on wages will worsen unrest in the mining industry, which accounts for more than 50 percent of exports.
Indian stocks declined to the lowest level in a month, led by automakers, after factory production in May fell to the lowest level in 50 months. Maruti Suzuki India Ltd. (MSIL) sank 2.3 percent after reporting sales in May slid 14 percent from a year ago. Sun Pharmaceutical Industries Ltd. (SUNP), India’s biggest drugmaker by value, also retreated.
Most Chinese stocks fell after manufacturing indexes signaled small businesses are struggling. Losses for technology companies and retailers overshadowed gains for property developers. The Shanghai Composite Index (SHCOMP) slipped 0.1 percent, while the Hang Seng China Enterprises Index of mainland companies dropped 0.5 percent.
The Philippine Stock Exchange Index slumped 3.7 percent, the lowest level since April 8. The measure is valued at 20 times this year’s estimated earnings, the highest among 15 Asia-Pacific markets, according to data compiled by Bloomberg.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage point, to 299 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.