Emerging-Market Stocks Fall as Earnings Miss Estimates

Emerging-market stocks retreated to the lowest level in about a month after results from companies including Tata Motors (TTMT) Ltd. and AngloGold Ashanti Ltd. missed analysts’ estimates. Brazil’s real sank to a four-year low.

The MSCI Emerging Markets Index fell 0.9 percent to 937.86, the lowest since July 10. Tata Motors slumped 3 percent in Mumbai as sales growth at its Jaguar Land Rover Ltd. unit slowed, while South Africa’s AngloGold Ashanti tumbled to a 12-year low after reporting a loss and suspending its dividend. Most Brazilian stocks declined as Banco Santander SA lowered its forecast for the Ibovespa and the real slid 0.7 percent.

About 60 percent of the companies in the benchmark of developing nations that reported quarterly results missed earnings projections, according to data compiled by Bloomberg. Stocks also joined a global slump on growing concern the Federal Reserve may reduce its bond purchases. The measure of emerging markets extended this year’s decline to 11 percent, compared with a 14 percent gain in the MSCI World Index.

“Negative earnings surprises are a sign of more negative surprises to come,” Paul Christopher, the St. Louis-based chief international strategist at Wells Fargo Advisors, said by phone. His firm oversees about $1.3 trillion. “We’ve returned to the same mindset that the Fed is going to remove stimulus, and that’s going to change the risk-reward to being invested in emerging markets in an unfavorable way.”

Biggest Losses

All 10 groups in the MSCI Emerging Markets Index retreated as technology shares had the biggest losses. The iShares MSCI Emerging Markets Index exchange-traded fund lost 1.1 percent to $38.54. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, jumped 5.6 percent to 23.35.

Brazil’s Ibovespa gained less than 0.1 percent as 43 stocks dropped and 27 rose. Santander cited slower economic growth and a weaker currency for the change in outlook. Smiles SA, the frequent-flier unit of Brazilian (IBOV) airline Gol Linhas Aereas Inteligentes SA, tumbled to a three-week low after Santander removed the stock from its recommended list.

The Micex Index (INDEXCF) capped the longest slide in two months as OAO Mechel, Russia’s biggest producer of coal for steelmakers, sank. Benchmark gauges in the Czech Republic, Poland and Hungary gained. Komercni Banka AS, the Czech unit of Societe Generale SA, surged to an almost five-month high as JPMorgan Chase & Co. (JPM) said profit will jump to a record next year.

Tata Motors

Indian equities fell for the second day amid concern a weak rupee will undermine the government’s efforts to revive economic growth. Tata Motors led a gauge of automobile companies to its lowest level in four months.

AngloGold Ashanti (ANG) dropped 3.7 percent as the third-largest producer of the metal suspended its dividend after bullion suffered a record three-month drop.

The Shanghai Composite Index fell 0.7 percent before a trade report tomorrow. Poly Real Estate Group Co. paced gains for developers on speculation regulators will ease limits on fundraising after China Merchants Property Development Co. announced plans to sell shares.

Hyundai Motor Co. (005380), South Korea’s biggest carmaker, and affiliate Kia Motors Corp. (000270) fell 3.2 percent in Seoul trading after labor union negotiators walked out of wage talks and threatened to ask workers to vote on a strike.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose 0.04 percentage point to 328 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Maria Levitov in London at mlevitov@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net; Jessica Summers in New York at jsummers17@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net

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