Emerging Stocks Fall as Brazil’s Real Drops Most in Month

Emerging-market stocks retreated to a one-week low, led by consumer discretionary companies. Brazil’s real posted the biggest decline in a month.

The MSCI Emerging Markets Index fell 0.3 percent to 1,007.55. HDFC Bank Ltd. (HDFCB) tumbled 2.8 percent in Mumbai for the biggest four-day decline since March 2009, while Kia Motors Corp. (000270) drove South Korea’s Kospi Index to the longest slide in four weeks. Hungary’s benchmark gauge surged as Egis Nyrt. jumped the most on record after receiving a buyout offer. The real led the losses among 24 developing-nation currencies.

The slump in the emerging-market stock measure trimmed its September advance to 8.4 percent amid concern that global economic growth will falter. The U.S. Congress hasn’t passed a budget for the 2014 fiscal year, which starts next week. China’s economy slowed this quarter as growth in manufacturing and transportation weakened in contrast with official signs of an expansion pickup, a private survey showed yesterday.

“The real issue is what happens to the global economy,” Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland said by phone. “China and the emerging markets in general are struggling to stabilize their growth rates and we will have to see where they go from here.”

Eight of 10 groups in the MSCI Emerging Markets Index retreated today. The broad gauge trades at 10.5 times projected earnings, compared with the valuation of 14 for the MSCI World Index, according to data compiled by Bloomberg.

Emerging ETF

The iShares MSCI Emerging Markets Index exchange-traded fund slipped 0.8 percent to $41.55. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, added 0.6 percent to 22.49.

Brazil’s Ibovespa declined for a second day as Tim Participacoes SA (TIMP3) fell the most since July 2012 after Banco Santander SA lowered the wireless phone carrier to hold. The real depreciated 1.4 percent, the most since Aug. 21.

Russian stocks rose for the first time in four days as OAO Uralkali, the world’s biggest potash producer, rallied after billionaire Mikhail Prokhorov’s Onexim Group was said to be among potential bidders for a stake. The Budapest Stock Exchange Index jumped 1.6 percent as Egis surged 31 percent after receiving an offer from its majority owner Les Laboratoires Servier.

China, India

The Shanghai Composite Index declined as China Shipbuilding Industry Co. slumped 2.6 percent, while Shanghai Lujiazui Finance & Trade Zone Development Co. jumped by the 10 percent daily limit after the state-run Xinhua News Agency said the city’s free-trade zone will open this weekend.

India’s S&P BSE Sensex decreased 0.3 percent after changing direction at least 10 times. HDFC Bank declined 2.8 percent, taking the four-day drop to 9.2 percent.

South Korea’s Kospi declined for a second day as Kia tumbled 2.1 percent.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose two basis points, or 0.02 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; Matthew Kanterman in New York at mkanterman2@bloomberg.net; Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

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

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