Emerging-market stocks fell to a six-month low as investors weighed prospects that global policy makers will refrain from additional stimulus. Turkish shares extended a plunge from this year’s record to 19 percent.
The Borsa Istanbul Stock Exchange National 100 Index led losses in developing-nation shares as Akbank TAS (AKBNK) and Turkiye Halk Bankasi (HALKB) AS slumped at least 3.9 percent, while Turkey’s bond yields surged. Chinese stocks capped the longest losing streak in a year as Industrial Bank Co. plunged. Short interest in the IShares JP Morgan USD Emerging Markets Bond Fund soared to a record. Brazil’s Ibovespa reversed earlier losses.
The MSCI Emerging Markets Index lost 0.6 percent to 985.05, the lowest close since Nov. 21. The European Central Bank President Mario Draghi said further stimulus will be left “on the shelf” as growth returns, while investors awaited the U.S. jobs report tomorrow to gauge the pace of recovery in the world’s biggest economy. Turkish Prime Minister Recep Tayyip Erdogan accused protesters across the country of violating laws and said he won’t permit a minority to dominate.
“Uncertainty is not a recipe for higher equity prices,” Walter ‘Bucky’ Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama, said by phone. “It’s a continuation of concerns about global growth and stimulus from the central banks.” The conflicts in Turkey are “scaring money away” from the country, he said.
All 10 groups in a measure of developing-nation stocks fell, led by health-care shares. The broad gauge trimmed this year’s drop to 6.7 percent, compared with an 8.7 percent jump in the MSCI World Index. The emerging-market measure trades at 10.1 times estimated earnings, a seven-week low, compared with the MSCI World’s 13.4, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund rose 0.8 percent to $40.90. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, lost 0.6 percent to 24.83.
BlackRock Inc., the world’s biggest money manager, said it reduced emerging-market positions, citing concern a reduction in bond buying, or quantitative easing, by the Federal Reserve may curb support for the assets.
Investors are the most bearish ever on the largest exchange traded fund for emerging-market bonds. Short interest, a measure of shares borrowed and sold on speculation they will fall, on the iShares JPMorgan USD Emerging Markets Bond Fund (EMB) surged to 8.5 million on June 5, according to data compiled by London-based Markit Group Ltd. That’s up from 1.9 million on Dec. 31 and is equivalent to 18 percent of the outstanding shares.
Brazil’s Ibovespa (IBOV) reversed an earlier loss as miner Vale SA surged 1.4 percent. The Mexican IPC index advanced as Corp. Geo SAB, Mexico’s second-biggest homebuilder by revenue, surged 6.7 percent after saying its main bank creditors have agreed to cooperate in a debt restructuring.
The Borsa Istanbul gauge slumped 4.7 percent as Akbank tumbled to a six-month low, while Turkiye Halk Bankasi dropped to the lowest level since Feb. 26. The benchmark measure reached a record on May 22. Yields on two-year benchmark bonds climbed a second day.
Russian shares fell to a one-year low as OAO Mechel, Russia’s steelmaker and biggest coking coal producer, fell for the seventh day, dropping 4.8 percent. The dollar-denominated RTS Index lost 1.1 percent after yesterday sliding into a bear market. The ruble-based Micex Index retreated 0.7 percent, the lowest level since June 2012. OAO TNK-BP Holding (TNBP) tumbled as much as 8.2 percent after the company’s board recommended not paying dividends for 2012, according to a statement today.
The Shanghai Composite Index fell a sixth day, while China’s overnight money-market rate climbed to a 16-month high on speculation cash supply will tighten as banks hoard funds. Industrial Bank, part-owned by a unit of HSBC Holdings Plc, slid 3 percent. The Hang Seng China Enterprises Index (HSCEI) of mainland companies capped a seventh day of declines after Nomura Holdings Inc. cut its rating on the city’s shares.
India’s S&P BSE Sensex declined 0.3 percent to a five-week low as Infosys Ltd., the country’s second-largest software exporter, fell 1.3 percent. Stock exchanges in the Philippines and Thailand have moved to soothe investors after speculation the U.S. Federal Reserve may scale back bond purchases prompted selloffs. Thai’s benchmark SET Index dropped to two-month low. The Philippine Stock Exchange Index gained 0.8 percent, after tumbling over the previous three days.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose five basis points, or 0.05 percentage point, to 315 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.